Canara Bank shares rally over 8% on announcement to divest over 14.5% stake in insurance arm via IPO

Canara Bank shares rallied more than 8% to hit a 52-week high of ₹127.90 on Monday, June 3, after the lender announced board approval of a proposal to divest around 14.5% stake in its insurance arm through a public offer.

In the past year, the stock has gained nearly 102%. Canara Bank shares traded at 52-week lows of ₹58.33 per share on June 26, 2023.

Canara Bank Board approves stake dilution in arm through IPO

In a filing to the stock exchanges, the lender said that its Board has approved a proposal to reduce the bank’s stake in its arm Canara HSBC Life Insurance Company by 14.5% through an initial public offering (IPO).

The state-run lender had a total of 51% stake as of March 31, 2024, in the insurance subsidiary, Canara HSBC Life Insurance Company.

The shares of the insurance subsidiary will be listed on NSE and BSE stock exchanges.

The bank will also seek approvals from the banking regulator Reserve Bank of India and the Department of Financial Services for the above proposal, according to an exchange filing by Canara Bank.

The bank said that it will decide on the size of the issue, opportune time and modalities of the issue in due course.

Canara Bank to raise up to ₹8,500 crore in FY25

The Canara Bank Board also approved proposals to raise a total of ₹8,500 crore capital in the financial year 2024-25.

The capital raising will be through debt instruments (Additional Tier I / Tier II Bonds).

According to the filing, the bank will raise ₹4,000 crore capital through Basel III Compliant Additional Tier I Bonds in FY 2024-25 subject to market conditions and necessary approvals.

The bank has proposed to raise up to ₹4,500 crore through Basel III Compliant Tier II Bonds in FY 2024-25 subject to market conditions and necessary approvals.

Canara Bank shares were trading 8.47% higher at ₹128 per share on the NSE at 12.30 pm.

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