Punjab National Bank to Raise Up to Rs.7,500 Crore Through QIP

Punjab National Bank (PNB), India’s second-largest public sector lender, has announced the launch of a qualified institutional placement (QIP) to raise between Rs.5,000 and Rs.7,500 crore. The issue, which opened yesterday, September 23, 2024, has a base offer of Rs.2,500 crore, with an option to increase it up to Rs.7,500 crore depending on demand. PNB has set the floor price for the issue at Rs.109.16 per share, reflecting a 2.1% discount from its recent stock price of Rs.111.51.

Board Approval & Capital Raising Plan

PNB is raising funds through a QIP to strengthen its capital base and support growth. The funds will help the bank meet regulatory requirements, maintain a good capital adequacy ratio, and fund expansion plans. 

The bank had secured approval from its board in December 2023 to raise up to Rs.7,500 crore in FY25 through QIPs or other equity issuance methods. Shareholders approved the plan in March 2024 during a general meeting. PNB Executive Director Binod Kumar confirmed earlier in the month that the bank was in the roadshow phase and would soon raise funds this quarter.

Investor Demand

PNB’s QIP roadshow has attracted high interest, especially from domestic mutual funds. The issue is expected to be priced at a 5-6% discount to the current market price. The bank plans to offer 24.09 crore shares, with an option to increase to 48.19 crore shares if the demand is strong enough.

PNB Share Performance

PNB’s share price has surged nearly 39% over the past year, outperforming the Bank Nifty’s 19% gain. The stock rose by 2.84% yesterday, closing at Rs.111.49 on the NSE. The bank’s market capitalisation now stands at approximately Rs.1.23 lakh crore.

Conclusion: With good investor demand and a strategic capital raising plan, PNB’s QIP will mark a step in strengthening its financial position for the fiscal year. The successful completion of this issue could further boost investor confidence in India’s second-largest state-run lender.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.