Canara Bank may raise Rs 6000 crore via QIP

Canara Bank may raise Rs 6000 crore via QIP

New Delhi, Jun 17: Public sector lender Canara Bank is raising Rs 6,000 crore through a qualified institutional placement (QIP) and has invited bids to hire five merchant bankers for the process.
According to the request for proposal (RFP) document reviewed by Mint, the final issue size may vary from the targeted corpus depending on factors such as management discretion and the decision of shareholders.
“The bank intends to tap capital markets via Qualified Institutional Placement (QIP) for an amount up to Rs 6,000 crore. Further, the bank intends to initiate the process relating to the selection and appointment of up to five book running lead managers (BRLMs) or merchant bankers to prepare the requisite documents and to undertake various activities in relation to the QIP,” the document said.
Canara Bank’s equity capital as on 31 March 2019 was Rs 753.24 crore, of which the government held 70.62% and the public held the balance 29.38%.
“The bank wishes to invite sealed bids from eligible merchant bankers/BRLM firms/companies for selection as BRLMs/merchant bankers to assist the bank in its QIP,” it said.
Other public sector lenders are also planning to raise money from the market to either meet regulatory capital requirements or for growth.
While Central Bank of India is looking to raise Rs 5,000 crore, Indian Bank is looking to raise up to Rs 7,000 crore from the capital markets.
Public sector banks still creaking under the burden of bad loans and mounting losses are expected to require capital up to Rs 40,000 crore.
As in the last few years, the government is unlikely to pump in the entire requirement and would rather prefer banks raise some of it from the market to stabilise first; getting them into lending mode would require another dose of capital.