State-owned lender Canara Bank has launched qualified institutional placement (QIP) to raise funds from institutional investors. As per the plans, the bank will raise to Rs 2,000 crore. The base issue size will be Rs 1,000 crore with an option to increase the deal by another Rs 1000 crore.
As per the formula of SEBI the company has set a base price of Rs103.5 per share for the share trade. The floor price for the bank is 11.84% at the closing price on NSE. The Investment banks namely ICICI Securities, Axis Capital, IDBI Capital, JM Financial and SBI Capital Markets are managing the share sale. Most of the Red Tapism can be avoided when raising funds through equity shares.
Canara Bank stated that under the laws, the bank intends to utilize the net proceeds for augmenting the Bank’s Tier I Capital. The net receipts will be used for growth plans of the bank and expanding the business of the bank. The bank also added that net earnings will be used for corporate requirements or any other purposes that were permissible under the applicable law. In addition to this, the plans have to approve by the board or the constituted committee. In the way of QIP for raising to Rs 2,000 crore, the bank had received shareholders consent in its annual general meeting which was happened in August.
QIP refers to a listed company issuing its equity shares to a selected group of qualified institutional buyers (QIBs). At the meeting held on December 7, the sub-committee of the board authorized the introduction of the QIP issue and the floor price per equity share was sanctioned at Rs 103.50. The board of directors of the bank has scheduled a meeting of the sub-committee of the board-Capital Planning Process on December 10, 2020. The agenda of the meeting is to consider and determine the issue price for the equity shares. The meeting will decide on the number of shares to be allotted to qualified institutional buyers.