United Bank plans Rs 330-cr IPO, issue opens on February 23

To offer 5 per cent discount to retail investors.

Public sector United Bank of India will raise up to Rs 330 crore through an initial public offering (IPO) comprising 50 million shares of face value of Rs 10 each. It will also offer five per cent price discount to retail investors.

“We are planning to price the share around Rs 60-66,” Chairman and Managing Director SC Gupta said here. The public offer would open for subscription on February 23 and close on February 25, he said. The issue price will be determined through a 100 per cent book-building process for the issue.

This is first public issue by a public sector bank (PSB) after the gap of two financial years. Central Bank of India had floated IPO in 2006-07. Amongst PSBs, only Punjab & Sind Bank remains to go public. The Delhi-based state-owned bank plans to hit the market in the next financial year.

The United Bank initial offer comprises a net issue of 47.5 million shares to the public and a reservation of 2.5 million shares for eligible employees. The issue will constitute 15.80 per cent of the post-issue paid-up capital and the net issue shall constitute 15.01 per cent of the post-issue capital of the bank.

Post-IPO, the government stake will be 84.2 per cent, while the public will hold 15.8 per cent stake.

Rating agency CARE has graded the public offer as CARE IPO Grade 4 indicating above average fundamentals, and Icra has assigned it Icra IPO Grade 3 indicating average fundamentals.

Gupta said the bank had restructured its capital base, thereby shrinking the equity base to Rs 266 crore from Rs 1,532 crore. Rs 1,266 crore has been shifted to reserves.

The capital adequacy ratio of the bank is 12.98 per cent with Tier-I of 7.61 per cent. Post-IPO, its Tier-I ratio will rise to 8.1 per cent.

The bank’s business is worth Rs 106,000 crore and has a customer base of 20 million. It has 1,480 branches with 80 per cent of them in the east and northeast regions. Its advances portfolio comprise 50 per cent corporate, 11 per cent retail, 12 per cent agriculture and 13 per cent micro, small and medium enterprises.