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UBI’s Rs330 cr IPO to begin tomorrow; price band Rs60-66 per share

UBI’s Rs330 cr IPO to begin tomorrow; price band Rs60-66 per share
PTI
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First Published: Mon, Feb 22 2010. 02 37 PM IST
Updated: Mon, Feb 22 2010. 02 37 PM IST
New Delhi: Public sector lender United Bank of India (UBI) will hit the capital market on Tuesday with an initial share sale offer to raise up to Rs330 crore.
The bank will come out with an initial public offer (IPO) of five crore shares, which will lead to the government stake dilution of about 15.8%. The issue would close on 25 February.
Post the issue, the government stake in UBI would come down to 84.2% from the existing 100%.
The company has fixed a price band of Rs60-66 a share for the IPO and if fully subscribed the government could mop up up to Rs330 crore at the higher end of the price band.
Brokerages feel the IPO valuation has been fixed at somewhat a discount that the peer group. “The discount in valuation seems to be justified on account of weak asset quality, muted core profit growth and strained margins when compared to peers,” Sharekhan said.
Of the five crore shares, 4.75 crore would be the net issue to the public and the remaining 25 lakh would be reserved for employees. Besides, the retail shareholders would get a discount of five per cent over the issue price.
The bank would utilise the proceeds to expand its balance sheet and augment its capital base.
UBI and Punjab & Sind Bank are the only two unlisted nationalised PSU lenders. While the government listed 19 PSUs on the stock exchanges several years ago, UBI will get listed nearly 40 years after it was nationalised in 1969.
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First Published: Mon, Feb 22 2010. 02 37 PM IST