The Hindu : Business : Dena Bank to tap market again

Online edition of India's National Newspaper
Friday, Dec 24, 2004

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Business

Dena Bank to tap market again

By K. T. Jagannathan

CHENNAI, DEC. 23. Even as Dena Bank is set to return to the capital market for the second time within a decade, foreign institutional investors (FIIs) have started showing interest in it by picking up its shares in the secondary market.

The FIIs have bought about 2.7 per cent of Dena Bank shares from the market, according to M. V. Nair, Executive Director of the bank.

The FII interest, happening for the first time for Dena Bank, comes ahead of the public issue to facilitate the Union Government dilute its holding in the bank to 51 per cent from the existing 71 per cent. The total face value of the shares being offered for the public is Rs. 80 crores. The bank has indicated a price band of Rs. 23 to Rs. 27 per Rs. 10 share for the public issue. The public issue is likely to happen in the middle of next month.

The bank, according to Mr. Nair, has chosen to go by the advice of lead managers to opt for a fixed rate rather than adopt the book-building route. The premium issue is expected to fetch around Rs. 200 crores for the bank.

Besides helping to improve the capital adequacy ratio to 12 per cent from 10.28 per cent as on September, the proceeds of the issue will be used to grow the books of the bank as well.

In a chat with The Hindu, the Executive Director said the bank's move to access the capital market should be seen in the backdrop of the difficult times it had gone through in the past. "We never went to the Government for a re-capitalisation," Mr. Nair said. "We have not only turned around, but are now positioning ourselves for the future," he pointed out. Fielding a range of questions, Mr. Nair said mergers and acquisitions were part of the growing process.

The bank, he said, had decided to engage specialists wherever it required expertise.

The Executive Director said the retail portfolio of the bank was around Rs. 900 crores as at the end of September 2004. It represented just about seven per cent its total loan.

The bank would drive this retail percentage up in the next three years, he said. Mr. Nair said the future focus of the bank would be on mid-sized corporates.

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