Shares of South Indian Bank Ltd. surged over 3% on Thursday after the private lender approved the terms of its rights issue for which it had granted approval in December last year.
The bank intends to raise ₹1,151 crore through the rights issue, assuming full subscription of the rights equity shares.
As per the terms, the lender will issue 52.31 crore rights shares each on a fully paid-up basis.
The rights issue price has been fixed at ₹22 per share, which is a discount of nearly 35% to the bank's closing price on Wednesday.
South Indian Bank's rights issue will open on March 6 and close on March 20.
February 27 has been fixed as the record date for the rights issue.
Shareholders of South Indian Bank will be eligible to receive one rights share for every four that they hold.
A rights issue is where a company raises funds by selling additional shares to existing shareholders of the company. In case an individual does not own shares of the company as of the record date, he/she is not eligible to participate in the rights issue.
The rights issue will result in an equity dilution of 25%, while the net worth will improve by 16%.
Post the rights issue, the lenders tier-I ratio will improve to 16.58% from 13.37% earlier, while Book value will decline by 7.2% to ₹31.9 per share.
Shares of South Indian Bank are off opening highs, currently trading 2.9% higher at ₹33.55.
