Canara Bank to make pref allotment of 4 crore shares to LIC

Canara Bank is making a preferential allotment of 4 crore equity shares to Life Insurance Corporation of India.

The bank said that today (March 31) would be the relevant date to determine the price of equity shares that would be offered to LIC. At today’s price of around ₹368, LIC may be required to invest close to ₹1,470 crore for its stake.

In a communication to the stock exchanges, the bank said that it was on April 28, 2014 that the bank’s board had decided to raise funds through QIP or preferential allotment during the current fiscal (2014-15 FY) (that incidentally ends today).

The bank, as decided by its board early this month, took up with LIC the issue of subscribing to its equity share on a preferential basis.

LIC had, on March 20, conveyed its 'in-principle' approval to subscribe to 4,00,00,000 shares (4 crore shares) at a price as per SEBI rules subject to the total exposure not exceeding 15 per cent of post issue capital of the bank at any point of time.

Canara Bank said its MD &CEO has approved the holding of EGM on April 30 to secure the consent of the shareholders to make the preferential allotment.

According to the terms of SEBI-ICDR regulations, today (March 31) is the relevant date for the purpose of determining the pricing of the equity shares that would be offered to LIC on a preferential allotment, the statement said.

The shares of Canara Bank were trading at ₹368.55, down by ₹4.15, about 15 minutes before the market is to close for the day.

The stock has been on a downturn and has shed nearly 25 per cent after touching a high of ₹498 on June 9, 2014. At today’s price, LIC may have to invest close to ₹1,470 crore for its stake.

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