IDBI Bank plans FPO in Jan; to raise $500 m abroad

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New Delhi: State-owned IDBI Bank on Friday said it would tap the capital market with a follow-on public offer in January next year to meet its future capital requirements. “We plan to come out with an FPO (follow-on public offer) in January,” IDBI Bank chairman & managing director Yogesh Agarwal told reporters here. The bank requires about Rs 15,000-16,000 crore in the next three to four years, Agarwal said.

Asked about the amount it plans to raise, Agarwal said, “(The) whole size of the issue would be double of what the government is willing to subscribe. If I come out with issue of Rs 2, government of India will have to subscribe one and the public has to subscribe the remaining one.”

The lender also plans to raise $500 million through issue of bonds in the international market to fund some of the Indian corporates’ overseas expansion programmes.

The promoter (government) holding in IDBI Bank stands at 52.67%,while the public holding is at 47.33%.

At the end of Friday’s trade, the shares of the bank were quoted at Rs 118.95, up 1.56%, on the BSE.

IDBI Bank is the latest to join the FPO bandwagon, as another state run entity, Rural Electrification Corporation, is likely to hit markets by February next year and will approach market regulator Sebi by December. Agarwal said the bank is yet to hear from the government on the amount of capital that it would receive. The announcement comes a day after the government said it seeks to list all profitable public sector enterprises.

The government has announced to recapitalise some of the ublic sector banks. It got a $2 billion (Rs 10,000 crore) loan from the IMF for capital infusion.

The capital adequacy ratio of the bank is about 11.7%, Agarwal added. On IDBI home finance sale, he said, it is not going through because the government has not given nod.

“For the present it is not on our radar," he said, adding, “We are considering merger of the entity with the bank as one of the options.” On the segment's growth, he said the bank expects to disburse Rs 8,000 crore in the current financial year. The outstanding housing loans stood at Rs 12,500 crore at the end of March, 2009.