State-owned Allahabad Bank is selling several prime properties across the country, including a land parcel in south Mumbai priced at a minimum of ₹166 crore, as part of plans to raise funds by selling off non-core assets, said two people aware of the development.
The bank placed a newspaper advertisement on 28 March inviting bidders for its land parcel at Mumbai’s Pedder Road area. Spread across 1,241 sq. metres, the property has a base price of ₹166 crore. Property consultant CBRE has been hired as adviser for the land sale.
“The property is presently an open plot of land covered by a compound wall made of bricks from all sides with provision of two compound gates," the bank said in its tender.
Apart from the land sale, Allahabad Bank is also planning to sell 11 commercial office spaces located in Mumbai, Lucknow, Nainital, Moradabad and Mussoorie among other places, said the first person mentioned above. “Most of the properties are commercial office spaces leased by the bank and located at prime areas of various cities," this person said.
The Kolkata-based bank, which was recently removed from the Reserve Bank of India (RBI)’s weak bank watch list, has been looking for ways to raise funds in FY20. On 26 February, the RBI took Allahabad Bank off its Prompt Corrective Action (PCA) framework allowing the bank to resume its lending activities. As part of the government’s bank recapitalization scheme, around ₹6,896 crore was infused into the lender, helping it exit the PCA framework.
Allahabad Bank has been looking to dilute its stake in general insurance joint venture, Universal Sompo, with other banks apart from selling its non-core real estate assets as part of its fundraising plan.
The bank expects to raise around ₹250-300 crore from the sale of non-core properties, S.S. Mallikarjuna Rao, managing director and chief executive officer (CEO) of Allahabad Bank said at an event in March in Kolkata.
“It is important for banks to hive off their non-core assets which are not productive to raise funds and focus on their core banking. However, raising money through sale of non-core assets would be a small amount in their overall fund raising plans. Banks need a much larger capital infusion into the system," said Pritesh Bumb, equity research analyst, Prabhudas Lilladher Ltd.
On 26 March, Allahabad Bank said in a regulatory filing it plans to raise up to ₹4,000 crore equity capital by way of public issue, rights issue and qualified institutional placements, or in combination in one or more of the tranches.
