The proposed Sampath Bank rights issue will be in vain to both the bank as well as the shareholders, according to stock analysts. "It is a no win situation as it is at present and it is doubtful that investors will buy a share currently in the Rs. 86 levels, at Rs. 100, which is the rights issue price," a stock market analyst said.
He said that many shareholders will take into account the events that have taken place in the country and the world and now Rs. 100 is not the right price for this issue.
The bank announced a rights issue amounting to 17.2 million shares at a ratio of 1-for-4 at Rs.100 each in a bid to expand its capital base (TIER I) and finance expansion plans. The bank is scheduled to issue upto 14.5% of the total issued capital at a price of Rs.117 per share to the International Finance Corporation (IFC) through a private placement. If the rights are fully subscribed IFC will get a maximum of 15.4 million shares. Further the bank was to issue shares of the bank valuing to US$4.5 million (maximum 4.2 million shares) at Rs.117 per share to ShoreCap. But both IFC and ShoreCap decided not to participate in the issue.
"Shareholders are highly unlikely to subscribe for the issue," a stockbroker said, adding that now Sampath cannot withdraw the issue, as per the Securities and Exchange Commission laws. However, he said the bank's net asset value per share matches the rights issue per share at Rs. 100. Harris Premaratne, newly appointed CEO at Sampath Bank, told The Sunday Times FT that it is the shareholders who would decide on the rights issue. "If they do not subscribe, the bank will re-look at the rights issue at a later date. "If the shareholders are willing to subscribe, we welcome them, because it is more money to the bank which will help us run the place more profitably," he said.