Date:04/02/2007 URL: http://www.thehindubusinessline.com/2007/02/04/stories/2007020404010100.htm

PNB proposes placement route to raise equity

K.R.Srivats

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New Delhi Feb. 3 Punjab National Bank (PNB) may directly place equity shares with qualified institutional buyers (QIBs) for raising fresh tier-I equity capital in the next fiscal to fund business growth.

"QIP (qualified institutional placement) is one of the options that the bank is considering for raising capital. The board recently gave in-principle approval for issuance of shares by way of QIP in line with SEBI guidelines. No final decision has been made," sources said.

Under the QIP route, shares are placed with informed institutional investors such as QIBs. PNB's board on January 31 gave its nod for an equity offering that would lead to the dilution of Government's holding in the bank from 57.80 per cent to 51 per cent.

QIP route is seen a as much quicker route to raise funds than through public issues. Last year, SEBI introduced the concept of QIPs to encourage listed Indian companies to raise funds from domestic market instead of tapping overseas markets.

Such an avenue for raising funds was put in place after concerns were raised over the growing number of Indian companies tapping the Global Depository Receipts (GDRs)/Foreign Currency Convertible Bond (FCCB) route for raising resources.

Under QIP, there are no pre-issue filings with the regulator. Issuers would have to allocate a minimum of 10 per cent of such placement to mutual funds.