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Our Bureau

Bangalore, Nov. 12 ING Vysya Bank has placed its preferential issue to qualified institutional buyers (QIB) at Rs 310 a share that translates into a discount of Rs 28.5 over the 52 week average price.

The bank through its QIB (banks, mutual funds, provident funds, venture funds and foreign institutional investors) placement raised approximately Rs 231.74 crore.

The preferential allotments were cleared by the bank’s extraordinary general board meeting, last weekend.

The placement also involved a preferential allotment to ING Mauritius Holdings and ING Mauritius Investments, both subsidiaries of the Netherlands-based financial power house ING Groep.

The preferential allotments to the Mauritius subsidiaries raised another Rs 156.88 crore for the bank.

ING Vysya Bank scrip’s opened at Rs 296 after the announcement today, down from last weekend’ close of Rs 315.50 though it closed the day at Rs 301, but off the 52 week average price of Rs 338.5.

The bank officials who declined to be quoted said that the capital infusion of Rs 388.62 crore was intended to help its asset growth for the current year.

No numbers were indicated for the target in asset book growth. Instead they said, “We plan to grow at industry average rates or even faster this year.”

ING Vysya Bank grew its advances by at least 25 per cent in Q2 over the corresponding period of last year.

The immediate impact of the equity infusion on the bank’s balance sheet would be on the capital to risk weighted asset ratio (CRAR).

The combined CRAR as March end this year was 10.56 per cent. The impact is likely to lead to a 200 basis points increase in the Tier I capital, the officials said.

ING Vysya Bank’s Tier I capital was Rs 929 crore as on March-end this year.

Infusion of the preferential equity would boost the Tier I capital of the bank to approximately Rs 1,318 crore.

The improved Tier I capital would also give ING Vysya Bank the flexibility to raise Tier II capital from the domestic/international financial markets. This capital could in the form of subordinated bonds or upper tier two bonds. Banks are permitted to raise Tier II capital up to 50 per cent of their Tier I capital.

The bank this year has so far not tapped the Tier II markets. Its Tier II capital was 4.18 per cent FY07 end (Rs 610 crore).

The combined CRAR would increase to about 12.5 per cent after the increase in the paid up equity.

The bank’s paid-up equity after the placement would rise to Rs 104.59 crore, up from the Q2 figure of Rs 91.04 crore.

Holdings of ING’s Mauritius subsidiaries were expected to rise to 4.6 crore shares. ING group’s holdings in the overall equity remained almost unchanged at 44 per cent despite the preferential allotments.

More Stories on : Preferential Allotments | Private Banks

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ING Vysya Bank raises Rs 232 cr via pref issue

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