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Central Bank IPO to open on July 24

Special Correspondent

Price band has been fixed at Rs. 85-102


Post-issue Govt. holding will come down to 80.20 p.c.

Issue proceeds will be utilised to augment capital


— PHOTO: Paul Noronha

SHORING UP CAPITAL BASE: H. A. Daruwalla (left), Chairperson and Managing Director, Central Bank of India, with Albert Tauro, Executive Director, at a press conference to announce the bank’s IPO in Mumbai on Friday.

MUMBAI: Central Bank of India is entering the capital market with an initial public offering (IPO) of 80 million equity shares of Rs. 10 each at a price to be decided through a book building process. The price band for the issue, which opens for subscription on July 24 and closes on July 27, has been fixed between Rs. 85 and Rs. 102 per equity share. After the issue, the shareholding of the Union Government in the bank will come down to 80.20 per cent.

The issue includes a reservation of four million equity shares for eligible employees of the bank (the employee reservation portion) and the balance 76 million equity shares would constitute the net issue to the public.

The issue will constitute 24.68 per cent of the pre-issue and 19.80 per cent of the post-issue paid-up equity capital of the bank. The issue has been rated by the Credit Analysis and Research (CARE) as CARE IPO 4, which indicates above the average fundamentals.

At least 60 per cent of the net issue to the public would be allotted on a proportionate basis to qualified institutional buyers (QIBs), of which five per cent would be available for allocation to mutual funds only and the remaining QIB portion would be available for allocation to all the QIB bidders, including mutual funds, subject to valid bids being received at or above the issue price.

Further, not less than 30 per cent of the net issue would be available for allocation on a proportionate basis to retail individual bidders and not less than 10 per cent of the net issue would be available for allocation on a proportionate basis to non-institutional bidders, subject to valid bids being received at or above the issue price.

“The issue proceeds will be utilised to augment the capital base of the bank to meet the future capital requirements arising out of the implementation of the Basel II standards and growth in assets, primarily the loan and investment portfolio, due to the growth of the Indian economy and for other general corporate purposes,” H. A. Daruwalla, Chairperson and Managing Director of the bank, said here on Friday.

The bank was founded on December 21, 1911, by Sir Sorabji Pochkhanawala with Sir Pherozesha Mehta as Chairman. It was nationalised in 1969 along with 13 other major commercial banks.

Considered to be the third largest bank in India in respect of the number of branches across 27 States and three Union Territories, Central Bank of India, as on March 31, 2007, has a domestic branch network of 3,194 branches comprising 1,341 rural, 759 semi-urban, 575 urban and 519 metropolitan branches. As on March 31, 2007, core banking solution had been implemented in 324 branches and 29 extension counters, covering about 35.40 per cent of the bank’s business.

Three main areas

The bank is focussing on three main areas: corporate; retail and agriculture. It has given considerable thrust to lending to the priority sector, including the agriculture sector.

The bank also offers a wide range of fee-based services to its customers, including credit cards; debit cards; cash management and remittance services; and collection services. It also distributes third party life and non-life insurance policies and mutual funds on an agency basis. As on March 31, 2007, the bank had a workforce of 39,055 employees serving over 25 million customers.

The equity shares of the bank are proposed to be listed on the Bombay Stock Exchange and the National Stock Exchange.

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