Punjab & Sind Gets Bids for 1.58 Times Shares in IPO

Punjab & Sind Bank, the last of the Indian state-run lenders to be listed, got bids for 1.58 times the shares offered in the first day of an initial public offer.

Investors bid for 63.2 million of the 40 million shares on offer for 113 rupees to 120 rupees apiece, according to data posted on the Bombay Stock Exchange’s website as of 5 p.m. The New Delhi based lender plans to raise as much as 4.8 billion rupees ($106 million), according to data compiled by Bloomberg.

The sale will add to the record 351 billion rupees raised by Indian companies in IPOs this year, according to Bloomberg data. The funds will be used to bolster capital as the bank seeks to tap credit demand in an economy forecast to expand at its fastest pace in three years. The IPO will cut the government’s stake to about 82 percent, the company said.

India’s benchmark Sensex Index has climbed 13 percent this year while the banking index has gained 31 percent.

“We recommend a subscribe to the issue on account of attractive valuations,” Vaibhav Agrawal, Shrinivas Bhutda and Vasant Lohiya, analysts at Angel Broking Ltd. in Mumbai, said in a note to clients today. The bank’s loans have climbed 36 percent on average annually for the last five years, helping it gain market share, they said.

The lender, which has most of its more than 900 branches in north India, brought its ratio of non-performing loans down to 0.44 percent as of Sept. 30, from 8.1 percent on March 31, 2005, according to a Dec. 4 sale prospectus.

Investment Banks

The share sale closes on Dec. 15 for institutional bidders and a day later for remaining investors, according to the sale prospectus. The IPO is being managed by SBI Capital Markets Ltd., Enam Securities Pvt. and ICICI Securities Ltd.

Kotak Mahindra Capital Co. is ranked first in arranging the sales this year, followed by Enam and Morgan Stanley, the data show.

Punjab & Sind Bank, set up in 1908, was among six banks that were taken over by the government in April 1980, according to its share sale document. State-run lenders now account for more than three-quarters of loans and deposits in India’s banking system, though the central bank began permitting private sector lenders to start operations in July 1993.

To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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