Sep 22, 2009

United Bk plans IPO in Jan 2010

United Bank of India (UBI) is looking to raise close to Rs 500 crore through its maiden initial public offer (IPO) that is expected to hit the markets by January 2010. UBI's listing will leave Punjab and Sind Bank as the only public sector undertaking (PSU) bank, which is yet to be listed.

The bank proposes to offload a 15% stake to the public by issuing 50 million shares that are likely to be priced between Rs 80-90 per share as per initial valuation estimates. The bank is confident that the issue will help it raise close to Rs 500 crore, proceeds that will be deployed in growing its asset base.

TM Bhasin, Executive Director of UBI says that they have submitted a request to the Government of India (GOI) and Reserve Bank of India (RBI) to go in for the IPO. "We expect to get the permission by October, and the IPO will hit the market by January." This year the government has assured the bank another Rs 550 crore. Their capital requirement has been worked out till 2012. Rs 1600 crore is the total requirement in tier one out of which Rs 550 crore will come and rest Rs 800 crore will be infused by the government next year.

The bank's capital has been restructured. Earlier the capital size was Rs 1,532 crore and Bhasin says it has been restructured to Rs 266 crore. The balance Rs 1,266 crore has been shifted to the capital reserve account. In addition, last year, the government infused Rs 250 crore via perpetual non-cumulative preference shares into the bank. This year, the government is going to infuse another Rs 550 crore, followed by another Rs 800 crore the year after.

"This year they have assured us another Rs 550 cr. Our capital requirement has been worked out till 2012. 1600 cr is the total requirement in tier 1 out of which 550 will come & rest 800 govt has assured they will infuse next year"

The bank is targeting a 40% credit growth this fiscal and also says an acquisition may be on the cards next year. With overall lending expected to improve, UBI is confident of its long term growth prospects.



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