Punjab National Bank (PNB), a state-owned institution, has proposed a plan to generate capital by selling up to 15 crore shares through its Employee Stock Purchase Scheme (ESPS). Based on the current market price, the scheme is expected to raise approximately Rs 780 crore.
What is Employee Stock Purchase Scheme?
An employee stock purchase plan (ESPP) is a company-run program in which participating employees can purchase company stock at a discounted price. Employees contribute to the plan through payroll deductions which build up between the offering date and the purchase date. At the purchase date, the company uses the employee’s accumulated funds to purchase stock in the company on behalf of the participating employees.
According to a notice regarding the annual general meeting, PNB intends to issue and allocate up to 15 crore new equity shares with a face value of Rs 2 each. These shares will hold equal status to the existing equity shares in all aspects, including dividend payment.
The issuance will occur in one or more tranches under the ESPS.The bank has scheduled the annual general meeting for June 30.PNB plans to determine the price or prices and establish suitable terms and conditions for the PNB-ESPS, ensuring that the government’s ownership stake remains above 52 percent.
As of March 31, 2023, the government currently holds 73.15 percent of shares in the bank.In 2018, PNB successfully raised Rs 500 crore from its employees through the staff stock purchase scheme. As part of this program, the bank offered up to 10 crore new equity shares to its employees at a discounted price of Rs 53.95 per share.