Central Bank IPO band at Rs 85-102

Central Bank of India, the 96-year-old government-owned lender, has fixed a price band of Rs 85-Rs 102 per share for its initial public offering of 8 crore equity shares, which will open for subscription on July 24 and close on July 27.

The bank will raise Rs 680 crore to Rs 816 crore through the issue. After the issue, government holding would come down to 80.2 per cent.

Qualified institutional buyers (QIBs) will be allotted at least 60 per cent of the issue. Of this, 20 per cent will be reserved for overseas investors and 5 per cent for mutual funds.

The retail portion has been fixed at 30 per cent of the net issue. Non-institutional investors can bid up to 10 per cent of the net issue. The bank will complete the allotments by August 11. Proceeds from the issue will be used to meet the additional capital requirements under the Basel II norms and to grow the bank’s assets.

“We should be in place to adopt the Basel II norms by March 31, 2008, though we are required to adopt the norms by March 31, 2009. Our capital adequacy ratio will fall by 1.25 per cent on account of operational risk under Basel II,” said H A Daruwalla, CMD of the bank.

The bank’s capital adequacy stood at 10.4 per cent at the end of March 2007.

The bank’s net worth was Rs 3,303.9 crore on March 31, 2007.

“Our capital adequacy will go up by 1 per cent after the issue to 11.81 per cent. Tier I capital will go up from 6.32 to 7 per cent,’ said Daruwalla.

The shares will be listed on the Bombay and the National exchanges.

ICICI Securities Primary Dealership, Citigroup Global Markets India, Enam Financial Consultants, IDBI Capital Market Services and Kotak Mahindra Capital Company, are the lead managers to the issue.