State-owned lender Andhra Bank is planning to raise Rs 800-1,000 crore through a qualified institutional placement (QIP) in the next five months to fund growth, a senior bank official said. The lender is looking to close the QIP issue by December, which would bring down the government’s shareholding in the bank below the 60 per cent mark.
The government’s holding in Andhra Bank stood at 61.26 per cent as on June 30, 2017. The proposal is expected to be cleared by the board shortly, after which the process for QIP would start, the official said adding, QIP is a cost-effective way of raising money rather than follow on public offer. “We got Rs 1,100 crore from the government as capital in the last fiscal.
After the fund infusion, the government’s shareholding in the bank increased,” the official said. Andhra Bank’s capital adequacy ratio as per Basel-III norms stood at 12.38 per cent as on March 31.
No plans to dilute stake in insurance joint venture
The bank has no plans to sell or dilute its stake in its life insurance joint venture, IndiaFirst Life Insurance Co Ltd, the official said. “We have no plans to sell stake in life insurance JV as we feel the valuation of the company will go up in the next 2 -3 years. Though we are not getting much dividend, but the company is making profit, so it’s better to wait for some more time before taking a call,” the official said.