PSU banks eye ₹13,000 crore from equity market this year

Public sector banks (PSBs) are queueing up to raise funds from the equity market, especially through qualified institutional placements (QIP) against the backdrop of improved investor sentiment on account of the government’s recapitalisation program and recent upgrade of sovereign bonds by Moody’s Investors Service.

After the government announced the ₹2.11 trillion recapitalisation plan in October, public sector lenders have announced plans to raise over ₹13,000 crore through QIPs during the year as against a total of ₹8,419 crore raised in the last three years.

On Tuesday, Bank of Baroda’s board approved fund raising up to ₹6,000 crore through QIP or rights issue, the bank stated in a stock exchange notification. Union Bank of India has also started its roadshows in Singapore, Hong Kong, London and New York to raise ₹2, 000 crore.

“The rating upgrade and recapitalisation were a big positive. Even though the Centre is yet to announce how the recapitalisation bonds will be issued, the intent to recapitalise the public sector banks is very clear. We will see these lenders accessing the market during before the end of current fiscal year,” said Rajeev Varma, head—financial institutions group, investment banking at Edelweiss Financial Services Ltd. The lenders will raise the money keeping in mind a time frame of 18-24 months. The banks are expected to raise funds on their own as well.

Banks are confident about their QIP issues as well. “Union Bank of India is expecting that the entire issue will be lapped up by the investors and it will not have to bank on Life Insurance Corporation for bailing out its QIP,” said a person with direct knowledge of the issue. The person added that there was a lot of interest among the investors, especially in Singapore.

Rajkiran Rai G, chief executive and managing director at Union Bank, declined to comment.

MUMBAI: