Federal Bank to raise Rs 2500 crore through QIP

Executing its strategic plan to raise funds, Kerala headquartered Federal Bank will be raising Rs 2,500 crore through qualified institutional placement (QIP), soon, to boost the tier-1 capital of the bank.
 
QIP, introduced by the market regulator SEBI, is a process through which listed companies raise funds by issuing securities to qualified institutional buyers.
 
The fund will be raised in tranches, with funds worth Rs 500 crore to be raised through a greenshoe option, according to reports. While the floor price of the issue is set at Rs 117.04 per share, the issue price of the share is expected to be considered and approved by its board on June 27.        
    
The bank had received its board’s approval for the plan to raise funds in April this year, whereas, the lender had also posted a capital fund worth Rs 8,539 crore as of March 2017. The tier-1 capital adequacy ratio of the bank, one of the key measures of a bank’s financial strength, stood at 11.8 per cent, well above the RBI and Basel III norms’ prescribed 7 per cent tier-1 capital requirements. The asset quality of the bank also improved drastically in the fourth quarter of FY17 to Rs 244 crore, quoting the lowest since the last seven quarters.         
 
The Federal Bank will become the second bank to raise capital through QIP in the current month, after SBI raised Rs 15,000 crore funds through a QIP, by issuance of huge number of 52.2 crore equity shares.
  
At 1100 hrs IST, the BSE Bankex index stood at 26966.03, up by 0.75 per cent, while the Federal Bank was the second top gainer of the index, quoting Rs 118.30, up by 1.24 per cent on the BSE. BSE Sensex was trading at 31,496.22 level at that time, up by 0.64 per cent.