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Allahabad Bank, which recently came out of the Prompt Corrective Action (PCA) framework of the Reserve Bank of India, is planning to raise ₹500-600 crore through sale of non-core assets next fiscal.
According to SS Mallikarjuna Rao, MD and CEO, the bank is hopeful of raising ₹200-300 crore through stake-dilution in its insurance venture, Universal Sompo General Insurance. The bank has appointed a consultant – Choice Consultant – for valuation of its stake.
Universal Sompo is a joint venture between the two public sector banks – Allahabad Bank and Indian Overseas Bank, Karnataka Bank, Dabur Investment Corporation, and Sompo Japan Nipponkoa Insurance. While Allahabad Bank holds 28.52 per cent equity stake, IOB holds 18.06 per cent, Sompo Japan 34.6 per cent, Karnataka Bank 6.02 per cent, and Dabur Investment Corporation 12.8 per cent stake in the venture.
“We have appointed a consultant for valuation. We are waiting for the March figures (for the insurance venture), so that it can be taken into consideration for valuation,” said Rao.
He was talking to newspersons on the sidelines of the launch of an online portal by Universal Sompo to issue a co-branded health insurance product, Allahabad Health Care Plus (ABHCP).
The bank is also looking to raise close to ₹300 crore through sale of land and properties. It has identified 11-12 properties, of which, three to four are in Mumbai, and the remaining across Lucknow, Jhansi, and other cities.
The bank, said Rao, had recently invited bids for the property, but did not receive any as the reserve price was on a higher side at ₹220 crore. So the bank is reworking on the reserve price, and is expecting to float a tender soon. The bank is hopeful of raising ₹150-200 crore through the sale of this property.
Allahabad Bank had recently received a fund infusion of ₹6,896 crore from the government. This was utilised to make loan-loss provision to bring down the net NPA ratio and also to shore up its capital base. While the capital infused is enough to take care of its regulatory requirements, it might have to raise some capital to fund its growth needs, he pointed out. The bank is expecting to grow its advances by 8-10 per cent in FY20.
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