The Hindu Business Line : City Union Bank allots 68 lakh shares on pref basis

Coimbatore, Oct. 8 Having got the Reserve Bank’s approval and the shareholders’ nod for raising capital through issue of 68 lakh equity shares of Rs 10 each at a premium on preferential basis, the Kumbakonam-headquartered City Union Bank today went ahead with the allotment.

The bank has allotted 3 lakh shares to L&T and 15 lakh shares to LIC at Rs 169.15/share, while fixing the rate at Rs 190 each for the 15 lakh shares allotted to FMO, Netherlands, 12.5 lakh shares each to Ares Investments LLC and Argonaut Ventures and 10 lakh shares to Yatish Trading Company.

The allotment in exchange for cash has aggregated to Rs 125.45 crore. It would enhance its capital from Rs 25.2 crore to Rs 32 crore.

The total holding by FIIs/NRIs, post this preferential issue, would be a little over 19 per cent against the 24-per cent norm.

Asked about the rate disparity, the CUB Chairman, Mr Balasubramaniam, said “we could not go beyond the SEBI price in the case of the L&T and LIC allotment. The others are overseas private equity funds and foreign development institutions”.

CUB took the placement route before going public to get a feel of the market pulse and was‘pleased’ with the outcome, its Chairman told Business Line.

Recalling the discussions he said ‘when we initiated the talks about 18 months ago our share price was well below the book value quoting at around Rs 75. Today, it is trading in the Rs 225-230 band.’

The bank is comfortably placed as regards capital adequacy at 12.58 per cent, he said and added that it should improve to 13 per cent soon.

Answering a query, Mr Balasubramaniam said ‘none of the allottees would have board representation. We foresee good growth in the coming years. We have started doing cash management services for the clients of L&T in Tamil Nadu and Kerala by supplementing their equipment finance service,’ he said.‘LIC has started opening accounts with us. It is an image-building exercise.’

Related Stories:
City Union Bank plans pref issue

More Stories on : Preferential Allotments | Stocks | Private Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page