Canara Bank to mobilise around Rs 500 crore via Canara Robeco IPO
Kolkata: Canara Bank is likely to garner a little over Rs 500 crore from the partial sale of its mutual fund subsidiary Canara Robeco Asset Management Company, people aware of the matter said.This will help the bank boost its capital adequacy ratio and continue advances growth and branch expansion without fresh equity raising.
Canara is likely to offload 13% holding in the asset management company , which last week filed a draft red herring prospectus with market regulator Securities & Exchange Board India seeking permission for an initial public offer to sell 49.8 million shares.
The IPO consists only of an offer for sale by promoters -- Canara Bank and Orix Corporation Europe NV -- while there will be no fresh issue of shares. "The bank would like to raise a little more than Rs 500 crore from the IPO," the person cited above said.
The bank did not comment on the matter.Canara Bank is likely to have grown its advances by about 10% year-on-year at the end of March. It is also expanding its branch network by opening 150-200 branches every year. Its capital adequacy ratio stood at 16.44% at the end of December. The ratio is likely to have increased as it would plough back profit into reserves. The bank would announce its fourth quarter earnings on May 8.The IPO proceeds would get added to capital adequacy calculation after the conclusion of the exercise. Canara Bank holds 51% in the asset management company while its joint venture partner Orix holds 49%. Orix would offload 12%.
The AMC was incorporated in 1993 as Canbank Investment Management Services Limited to manage the assets of Canbank Mutual Fund. Orix, which was previously known as Robeco Groep NV, came in as joint venture partner in 2007. The company grew at a CAGR of 34.75% between March 31, 2022, to
March 31, 2024, in comparison to industry growth of 18.8%, according to the Crisil report. The company's likely IPO size could be around Rs 1000 crore. The final size will be disclosed after the price discovery, which will be done through a book-building process.
After this, Canara Bank would also monetise its holding in Canara HSBC Life Insurance where it holds 51%. It would sell 14.5% stake in it through the proposed IPO of the insurance company.
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