Allahabad Bank share sale to staff sees 87.6% subscription

Kolkata: Allahabad Bank’s share sale to employees closed last week with an 87.6% subscription, exceeding the management’s expectations, even as a section of employees had alleged they were pressured to buy the shares.

Allahabad Bank raised around Rs236 crore through the share sale against its target of around Rs270 crore.

The bank had offered 50 million shares to its employees at a discount to the market price, but by the time the issue opened for subscription, the stock was under pressure. Allahabad Bank offered shares at Rs53.94 each under the employee share purchase scheme (ESPS). Shares issued under the scheme are locked in for a year. On Friday, the bank’s shares closed on BSE at Rs54.75 each.

The share sale closed on 13 February, following which the bank said in a regulatory filing that response to the issue was “overwhelming”.

A spokesperson for Allahabad Bank said 43.8 million shares were bought by some 22,133 employees. The bank had offered its shares to 24,155 employees—to everyone from the chief executive officer to the sweeper.

Faced with allegation of coercion, executive director N.K. Sahoo had previously said the bank had only made an appeal to its employees to subscribe to the issue, and that the management wasn’t expecting the issue to be fully subscribed. Even 75-80% subscription would be considered a “success”, he had said.

A section of workers had said that they feared retribution if they didn’t subscribe to the issue. They had even written to the regulators, seeking intervention.

The management was “extremely happy” with the response to the issue, a spokesperson for Allahabad Bank said. Going forward, the bank is likely to raise more equity capital by selling shares to institutional investors, he added.

Besides raising risk capital, the aim of ESPS was to shore up investor confidence.

The bank offered up to 6,600 shares to its managing director and chief executive officer Usha Ananthasubramanian, and 6,550 shares each to its two other wholetime directors. Even sweepers were offered 200-300 shares, based on grade.

But the bulk of the subscription came from officers—between two grades, they were offered more than half the shares on sale.

The bank has 7,057 scale-I officers, and collectively, they were offered 16.58 million shares in all. Individually, they were allotted up to 2,350 shares each, and were expected to fork out around Rs1,27,000. Additionally, the bank has 2,464 scale-III officers and they were allotted up to 9.85 million shares. Individually, they were expected to buy shares worth up to Rs2,16,000.livemint