Bank Of India To Raise Rs 4,500 Cr Through Equity Offering In Q1FY24

Bank of India is planning to raise up to Rs 4,500 crore in equity capital to support business expansion in the current quarter ending June 2023 (Q1FY24).

The bank's board of directors has authorised it to raise up to Rs 6,500 crore in FY24. The capital raising strategy is divided into two parts. The first is the issuance of new tier-I capital in the form of a follow-on public offering, a qualified institutional placement (QIP), or a rights issue.

As part of this component, the Mumbai-based lender has received authorisation to issue Rs 4,500 crore in additional tier-1 (AT1) notes. The second component is the issuance of tier-II bonds worth up to Rs 2,000 crore. The bank may seek shareholder approval for a capital-raising request.

Bank officials said that an equity offering early in the year (April-June 2023) would allow them to focus on the company for the remainder of FY24. The decision would be influenced by market conditions. The equity offering will help reduce the Centre's stake from more than 81 per cent to less than 75 per cent by the end of March 2023.

According to executives, the bank would consider AT1 bonds only if it could not raise equity owing to reasons like market conditions.

The institution, which has over 5,000 branches nationwide, had a capital adequacy ratio of 15.6 per cent, with common equity tier-1 (CET-1) capital of 12.77 per cent, including a capital conservation buffer. It posted a healthy credit increase of 16.08 per cent year on year through 31 December.

Depending on market conditions, the tier-II bond issuance might assist replace bonds worth Rs 1,500 crore that is due to mature in September.