IDBI announces Jan FPO, to raise $500 mn from overseas

Sat, Nov 7 06:47 AM

IDBI Bank plans to launch a follow-on public offer in January to mop up funds to fuel its future capital requirements. The quantum, however, is yet to be decided. The public sector bank is also exploring option to raise $500 million by issuing bonds in overseas markets to fund its expansion programmes in other countries.

"We plan to come out with an FPO (follow-on public offer) in January," said Yogesh Agarwal, IDBI Bank chairman and managing director. Besides, he said the bank is planning to raise $500 million by the end of this year by issuing bonds in the overseas market under its $1.5-billion MTN (mid-term notes) programme. The funds raised through this route will be utilised to fuel its expansion plans in other countries.

The bank requires about Rs 15,000-16,000 crore in the next three to four years. While a part of the capital needs of the bank will be funded via this FPO, the rest will be through government support. The government has sought a $3.2 billion-loan from the International Monetary Fund (IMF) to infuse in public sector banks. While th government plans to inject $2 billion in various public sector banks this year, the rest will be done next fiscal. IDBI Bank, however, is yet to hear from the government on how much it would be getting for capital infusion.

The bank's capital adequacy ratio (CAR) is about 11.7 per cent — which is a tad lower than the 12 per cent target set by the government. On home loans, the bank expects to disburse Rs 8,000 crore under the segment in the current financial year. The outstanding housing loans stood at Rs 12,500 crore at the end of March, 2009.

The bank posted a 57 per cent rise in its net profit for the quarter ending September, 2009, helped by growth in both net interest and fee-based income. Net profit of the bank for the July-September quarter was at Rs 254 crore, up from Rs 162 crore a year ago. The bank's net interest income rose to Rs 472 crore, up from Rs 129 crore a year ago, while fee-based income rose 99 per cent to Rs 390 crore.

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