Home >Markets >Stock Markets >Canara Bank rallies 9% as lender launches QIP

MUMBAI: Shares of Canara Bank jumped 9.5% on Tuesday after the public-sector lender launched a qualified institutional placement (QIP) to raise funds from institutional investors.

At 0200 pm, the stock was at 128.20 apiece, up 9% from its previous close, while the benchmark Sensex rose 0.4% to 45,628.70. On a year-to-date (YTD) basis, the stock has declined 43.9% while the Sensex has climbed 10.4%.

A sub-committee of the bank's board at a meeting held on Monday authorised the QIP issue at floor price of 103.50 per equity share, it had said in a regulatory filing. The floor price is at a 11.95% discount to Monday's closing price of 117.55 per share.

"A meeting of the sub-committee of the board-Capital Planning Process of board of directors of the bank is scheduled to be held on Thursday, to consider and determine the issue price for the equity shares as well as the number of shares to be allotted to qualified institutional buyers, pursuant to the QIP," the bank said in a press release to the exchanges.

The bank's board at a meeting held on 25 September had decided to raise additional equity share capital amounting to up to 2,000 crore through the QIP route, by issuing such number of equity shares in one or more tranches.

"The said QIP issue shall be within the overall maximum limit of board approved capital raising plan (FY 2020-21) of 5000 crore equity share capital," it had said.

In its draft placement document filed with the bourses, Canara Bank said it intends to utilise the net proceeds for augmenting its Tier I capital to support growth plans and to enhance its business, and for general corporate requirements or any other purposes.

The PSU lender reported a 21.8% year-on-year jump in its September quarter net profit to 444.41 crore and a 44% rise in income to 20,836.71 crore.

The government of India held 78.55% stake in the bank as of 30 September.

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