Syndicate Bank opts for QIP route to raise capital

Syndicate Bank has decided to raise its additional capital through the qualified institutional placement route instead of the follow-on public offer programme planned early this year. Syndicate Bank’s move followed the Government’s recent liberalisation permitting public sector undertakings/enterprises to raise capital through placement with placements of equity with qualified institutional buyers (QIB). Bank of India has already received permission to tap QIBs and is poised to make the placement. QIBs include financial institutions, banks, mutual funds, foreign institutional investors registered with SEBI, venture capital funds and multilateral financial institutions. Syndicate Bank’s capital raising involves issuing an additional 8 crore (80 million) equity shares. The equity float was expected to bring down Government stake in the bank from the current level of 66.47 per cent to around 57.64 per cent. The bank currently has a capital to risk weighted asset ratio of 11.99 per cent. However, its tier 1 capital was 6.99 per cent or 99 basis points over the prescribed threshold of 6 per cent. Syndicate Bank also had the flexibility to raise at least Rs 240 crore through perpetual bonds, to push up the tier one capital ratio.