Central Bank to consider follow-on public offer – Times of India

MUMBAI: Central Bank of India is looking at ways to improve the liquidity of the bank’s stock, which has fallen below 10%. The bank’s qualified institutional placement (QIP) raised half of what it sought as stock liquidity and was seen as one of the issues for large investors.
The bank had floated a QIP last week under which it managed to raise only Rs 255 crore. In August, the bank obtained approval from shareholders to raise up to Rs 5,000 crore by way of the public offer, rights issue, and QIP.
“The QIP was open for private placement for two days, but it was subscribed only 50%. We did not seek investment from foreign investment process as a separate approval process was required for FIIs and we decided to test the waters,” said Central Bank of India MD & CEO Pallav Mohapatra.
He said that one feedback that the bank had received was that a public issue would have a better response. He added that one of the reasons for the lack of interest among institutions was that the float available in the bank’s stock is very small, given that the government and LIC holding is over 90%.
“Unless the trading volume increases, the price discovery does not take place,” said Mohapatra. “We needed Rs 200-250 crore as growth capital because we do not expect a significant capital requirement. We have enough headroom to lend to MSMEs under the government guarantee scheme, which does not require any capital. In addition, we are growing our gold loan portfolio where there is zero risk weightage,” said Mohapatra.