Indian Overseas Bank (IOB) has successfully raised Rs 1,436 crore through the Qualified Institutional Placement (QIP) route. The QIP, which was oversubscribed, received bids worth Rs 2,236 crore, indicating strong investor interest in the bank’s stake sale.
LIC, one of India’s largest institutional investors, bagged the largest chunk of the stake, picking up 15.5% of the total shares on offer. IIFL Finance, another prominent investor, purchased 10.2% of the stake, while State Bank of India (SBI) Pension Fund, which is a significant investor in public sector banks, acquired 7.5% of the total shares.
The QIP was marked by strong participation from institutional investors, with foreign funds and(mutual funds) scooping up a significant portion of the stake. Other notable bidders included Credit Suisse, Baring Private Equity, and the Abu Dhabi Investment Authority.
IOB’s QIP was done through the preferential allotment of 41.4 crore shares at a price of Rs 34.5 per share, which represents a discount of 4.3% to the bank’s closing price on the BSE. The proceeds from the QIP will be used to augment the bank’s capital base, which will enable it to strengthen its balance sheet and support future growth.
The QIP comes at a critical juncture for IOB, which has been under the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework since 2017. The bank has been working to strengthen its capital adequacy ratio and overcome its Board-approved threshold trigger, which requires it to raise fresh capital to maintain regulatory compliance.
The successful QIP will provide IOB with a significant boost, enabling the bank to reinvigorate its lending activities, improve its profitability, and expand its presence in the Indian banking landscape. With a larger capital base, IOB will be better equipped to confront the challenges posed by the current pandemic and the changing economic landscape.
Overall, the QIP is a testament to the bank’s resilience and ability to attract investors in a challenging market environment. It also underscores the confidence that institutional investors have in IOB’s growth prospects and its ability to overcome its current challenges and emerge stronger in the future.