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THE country's second-largest housing finance company, LIC Housing Finance, has hit the market with a $130-million qualified institutional placement (QIP) issue. The issue of 10 million shares, representing around 10% of the company's capital, at a rate band of Rs 650-660 per share has generated huge interest. The QIP will take LICHF's tier I capital adequacy ratio to 12% and the combined CAR to 16%. Further, it will increase the HFC's headroom to issue upper tier II debt and tier II bonds up to Rs 600 crore each. The cash will come in handy to take on competition from Big Daddy SBI. In the financial space, some South-based private sector banks like ING Vysya have hit the market with QIPs so far. The biggest one would however be from Axis Bank, which is expected to hit the market shortly with a mix of a GDR and QIP.
REDESIGNATEDFORMER CMD of Bank of Baroda AK Khandelwal has been redesignated as director of Baroda Pioneer MF. Many will recall that just days before he retired from the bank in March 2008, former finance minister P Chidambaram announced amid a lot of fanfare that Mr Khandelwal would soon become the chairman of Baroda Pioneer Mutual Fund, a joint venture been Bank of Baroda and Pioneer Investment. Industry officials say that Mr Khandelwal has recently been redesignated as director, while the company has not yet named his replacement. This is the second time that a CMD of Bank of Baroda has been redesignated. Earlier, PS Shenoy, who was appointed as IFCI chairman, was redesignated as director, and is no longer on the board of IFCI.
AVOIDING THE KYC HURDLETHE Reserve Banks has taken exception to banks giving the cold shoulder to the economically-disadvantaged individuals who seek to open no-frill accounts. The conflict came to the fore at the Economic Times Banking Technology Conclave 2009, when RBI chief general manager Deepali Pant Joshi narrated her futile attempt to get such an account opened for her chauffeur due to banks' reluctance. Observing that banks typically allude to know-your-customer (KYC) norms to turn away such customers, Ms Pant Joshi brought to their notice the relaxation in guidelines that exempts low-income groups from the procedure if an existing customer agrees to introduce the new customer.
LATEST IB ENTRANTDHANALAKSHMI Bank has become the latest bank to foray into investment banking. To start with, the bank seeks to enter the debt syndication and equity areas. It has already hired Parag Kothari, former head of corporate finance at Cholamandalam DBS, to head its IB division. The bank is expected to hire around a dozen people over the next few months. The banks is also renewing its merchant banking licence from Sebi to help companies raise money in the primary market.
UNDER WRAPSCUT-THROAT competition among investment banks is nothing new. However, with low business volumes, competition has only increased. Most institutions have become wary of acknowledging that they are hitting the markets, be it for a QIP or a GDR. One of the reasons for this is short-selling of the stock on the day a company is said to hit the market. Issuers and bankers feel that other than some sections of the market, rival bankers are also responsible for the short sales. No wonder then that big corporates have been refuting any equity-raising plans even hours before the issuance.
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