Federal Bank on Wednesday said that it has set a floor price of Rs 132.59 per share for its planned fundraise through the qualified institutional placement (QIP) route.
“The credit, investment, and raising capital committee of the bank’s board of directors authorised the opening of the issue on the same day,” said Federal Bank in a stock exchange filing.
In May, it was reported that Federal Bank planned to raise approximately Rs 4,000 crore through a combination of QIP and preferential allotment.
The pricing formula arrived at by the committee is Rs 132.59 per equity share, with a provision to offer a discount of up to 5% on the floor price. The floor price of Rs 132.59 represents a discount of around 2% compared to the current market price. On July 19, the bank’s stock settled at Rs 135.70 on the BSE, marking a 0.67% increase from the previous closing price.
The capital infusion aims to support the bank’s retail growth and inorganic activity. Federal Bank received a Rs 916-crore equity infusion from the International Finance Corporation (IFC), the investment arm of the World Bank, in July 2021. However, it remains uncertain if IFC would participate in case the preferential allotment route is adopted by the bank.
The capital infusion aims to support the bank’s retail growth and inorganic activity.
CEO Shyam Srinivasan in an interview with Bloomberg in May 2023 said that the bank planned to raise to $486 million in the next few months to facilitate its expansion. The funds could be raised through debt or equity, or a combination of both. The capital would be used to support growth in retail banking, including the opening of approximately 100 branches this year, as well as potential acquisitions in the microfinance sector.
In the quarter ending June 2023, Federal Bank reported a net profit of Rs 854 crore, marking a 42% increase from the same period last year. The net interest income also saw a significant rise of 20% to Rs 1,918 crore compared to Q1FY23.
