The Hindu Business Line : Karnataka Bank EGM okays pref allotment to IFC

Mangalore, Oct. 31 The Extraordinary General Meeting (EGM) of shareholders of Karnataka Bank on Wednesday passed a unanimous resolution giving consent to the issue of 63.73 lakh equity shares of Rs 10 each on preferential basis to the Washington-based International Finance Corporation (IFC), an arm of the World Bank group.

The bank is planning to raise around Rs 140 crore through this allotment at Rs 225 a share.

Placing the special resolution at the EGM, Mr Ananthakrishna, Chairman and Chief Executive Officer,, said the shares are proposed to be issued at Rs 225 a share, including the premium of Rs 215 a share.

“It is about 1.25 times of the book value. With this, the bank will get Rs 140 crore. Our aim is to get maximum benefit, with minimum dilution of equity ,” he said.

However, he made it clear that the shares will be allotted after getting permission from the Reserve Bank of India. Mr Ananthakrishna said the IFC is also subscribing to the bank’s upper tier-II bonds to the extent of $10 million.

“With the issue of these shares and bonds, the Capital to Risk weighted Assets Ratio (CRAR) of the bank will improve significantly,” he said. Both the preferential share allotment and upper tier II bonds will contribute around Rs 175-Rs 180 crore.

To a query by a shareholder whether it might lead to any takeover moves, he clarified that the investment will shield the bank from any such moves. “This will remain a common man’s bank. IFC’s investment will avoid others eyeing us. IFC is a development investor,” he said.

Later addressing presspersons, Mr Ananthakrishna said the bank has licences to open 24 branches. The number of ATMs will be increased to 118 to 150 during the year, he said.

Asked if the bank is eyeing small banks for acquisition, he said: “We will certainly look for that. In fact, we had certain proposals earlier. We did not proceed on that on account of valuation.”

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