Canara Bank to Sell 14.50% Stake in Arm Via IPO; CANBK Share Price Up 4%

On June 3, Canara Bank share price surged by 4.5% in the early trading session following the company's decision to reduce its stake in its subsidiary, Canara HSBC Life Insurance Company, via an IPO. At 09:23 am, Canara Bank share price was trading at ₹123.40, reflecting an increase of ₹5.40 or 4.58% on the BSE.

Canara Bank has granted approval to begin the process of reducing its 14.50% stake in its subsidiary, Canara HSBC Life Insurance Company, by listing the company on stock exchanges (BSE/NSE) through an Initial Public Offering (IPO). At the close of the fiscal year 2024, the bank held a 51% stake in this insurance subsidiary.

"Canara Bank has accorded approval for initiating the process of diluting 14.50% stake of the Bank in its subsidiary M/s Canara HSBC Life Insurance Company Ltd by listing the Company in Stock Exchanges (BSE/NSE) through Initial Public Offer (IPO)," the bank said in a regulatory filing.

This process will be subject to approval from the Reserve Bank of India and the Department of Financial Services, Government of India. The company stated that the size of the issue, the appropriate timing, and the modalities of the issue will be determined in due course.

At its meeting on May 31, the company's board approved a capital raising plan for the financial year 2024-25, amounting to up to ₹8,500 crore through debt instruments (Additional Tier I / Tier II Bonds). The plan includes raising up to ₹4,000 crore through Basel III Compliant Additional Tier I Bonds during FY 2024-25, contingent on market conditions and necessary approvals.

The details of the IPO, such as its size, timing, and modalities, will be finalized in due course. Canara Bank has committed to keeping the exchanges informed of all significant developments related to the IPO in accordance with the applicable regulations. "The size of the issue, the appropriate timing, and the modalities of the issue will be determined in due course. The bank will update the exchanges on all material developments regarding this matter, as and when required, in line with applicable regulations," the bank stated.

Additionally, the bank plans to raise capital through Basel III Compliant Tier II Bonds amounting to ₹4,500 crore during FY 2024-25, subject to market conditions and necessary approvals. The bank reported an 18.4% increase in its net profit, reaching ₹3,757.23 crore, in the fourth quarter of the financial year 2023-24. Sequentially, net profit rose by 2.8%.