Bank of India is planning to raise Rs 3,000 crore equity capital through a qualified institutional placement (QIP) offer to fuel business growth and meet regulatory compliance, sources said.
"The bank is in the process of raising Rs 3,000 crore through QIP and seven book running lead managers have been appointed for the proposed issue," sources privy to the development said.
A non-deal roadshow to woo investors concluded on Monday.
The management of the bank participated in one-on-one and group meetings for the roadshow during August 10-23, 2021, the bank said in a filing.
Total 26 investors participated in the roadshow including Yes Bank, IDFC Bank, HDFC Treasury, ICICI Prudential Life, Edelweiss, SBI Life, Mirae, Kotak Life, Federal Bank, Marshal Wace, Polunin among others, the bank said.
The purpose of the issue is not only to fuel regular business growth, but also to deploy capital for improving technical platform of the bank, co-lending digital operations, tie-ups with fintech companies, and syncronisation of tech platform with overseas and domestic operations, as per the sources.
The bank will also utilise the proceeds of the QIP for developing app based retail loan applications and offer electronic bill discounting facility, they added.
"Also, Government of India, our promoter is currently holding 90.34 per cent stake in the bank as of June 30, 2021. With the proposed QIP of Rs 3,000 crore, the promoter's stake will come down to a substantial level and as a result, the compliance with Sebi guidelines of maintaining minimum public shareholding will be ensured," a source said.
The bank's asset quality has shown consistent improvement with gross non-performing assets (NPAs) falling to 13.5 per cent as of June 30, 2021 from 13.8 per cent at end-March 2021. The gross NPAs were at 14.8 per cent by end of March 2020 and 15.8 per cent by March 2019.
Besides, the bank has returned to profitability as against back-to-back losses in FY19 and FY20.
Bank of India earned a net profit of Rs 720 crore in June quarter 2021-22. In FY21, there was an overall profit of Rs 2,160 crore. The lender had suffered a net loss of Rs 2,960 crore in FY20 and of Rs 5,550 crore in FY19.
"Around 88 per cent of the gross advances are comprised of A rated and above as well as GGA (government guaranteed advances) segment advances. Most of the bank's gross advances presently comprise secured and good rated assets.
"The bank's focus going forward would be towards RAM (retail, agri, MSME) and GGA segments, particularly with the emphasis on the good rated and sovereign guaranteed advances, so that the bank can maintain asset quality in future," said a source.
Further, the bank has identified total restructuring book of not more than Rs 11,500 crore. Out of this, the bank has restructured Rs 7,300 crore till June 2021 and the rest of the restructuring will be made before the threshold date of September 30, 2021.
"So, together with the restructuring and SMA (special mention accounts) 2 portfolios, the stress loan book stood at less than 3 per cent on gross advances (as on June 2021) and the same is significantly low, in comparison to other peer banks," they said.
