Global Trust Bank is moving towards finalising its capital raising and restructuring plans.
The board of directors of the bank, at its meeting in Hyderabad on Tuesday, will discuss these plans and take a view before giving it final shape in another 2-3 weeks.
According to reliable sources, the bank is looking at the possibility of offering up to a 49 per cent stake to strategic or financial investors.
This will be followed by a rights issue. The bank is also likely to write down part of its capital to set them off against the non-performing assets, as in the case of Centurion Bank.
Sources indicated that US-based Newbridge Capital and the Hong Kong-based AIF in association with Warburg Pincus have shown interest in acquiring stake in GTB.
Both the parties had preliminary discussions with the GTB management and now have an idea of the provisions and additional capital infusion required to turn around the bank.
Of the two, Newbridge Capital is looking at 49 per cent, while AIF-Warburg is looking at a 26 per cent stake.
The $20 billion Newbridge Capital had acquired First Korean Bank in 1999 by infusing $500 million and turned it around in 3 years.
According to sources, the bank may have to make a provision of around Rs 350 crore (Rs 3.5 billion) for the NPAs and to support this and to keep business growing, the bank needs a capital infusion of Rs 250-300 crore (Rs 2.5-3 billion).
The bank will be announcing the financial results for the year ended March 31, 2003 on September 30.
Meanwhile, GTB has inducted Dayanand Soma, a city-based businessman, as a director on the board.
If every thing goes well, the deal's structuring is likely to be similar to that of Centurion Bank, where the existing paid-up capital will be written down to a considerable extent, followed by fresh infusion of capital by the new partners and a rights issue to existing shareholders.
The stake of the promoters, Ramesh Gelli and associates, in the present Rs 121.36 crore (Rs 1.21 billion) paid-up capital of the bank stands at 20.69 per cent.
The International Finance Corporation, Washington, which has been associated with the bank since its inception as a stakeholder, recently announced the reduction of its stake in GTB to 7.77 per cent from 10.38 per cent.
It sold 31.73 lakh (3.17 million) shares in the market between August 13 and August 22.
It is also learnt that IFC subsequently sold another 500,000-600,000 shares in the market.
