After a three-week wait, UTI Bank today received shareholders' approval for its $1 billion (over Rs 4,000 crore) capital raising plan. The bank had deferred its plans to raise capital through a global depository receipts (GDR) issue as promoters - The Specified Undertaking of Unit Trust of India (SUUTI) and Life Insurance Corporation (LIC) - had asked for more time to take a view on the capital raising plans. SUUTI owns 27.43% stake in the bank and LIC holds 10.38%.The shareholders, at an extraordinary general meeting, ratified the board's decision to sell over 2.82 crore shares through qualified institutional placement (QIP) and another 1.41 crore shares through a GDR issue. The exercise will lead to 15% dilution in existing shareholding.The bank had earlier planned to raise the entire amount by selling GDRs to be listed on the London Stock Exchange (LSE)."We would like to raise equity through a route that provides the bank capital at a higher price. The board debated on a composite structure which includes a combination of wholesale and retail issue (FPO and rights issue) or only a wholesale issue. We found that the best price discovery happens when capital is raised through an wholesale issue,'' said P J Nayak, chairman and managing director, UTI Bank.Banking sources indicate that the GDR could be priced in the range of Rs 635-640. UTI Bank scrip at the Bombay Stock Exchange ended the day at Rs 641.Additionally, UTI Bank will issue 3.19 crore shares to promoters to enable them to maintain their current holdings. The base price for the preferential offer has been set at Rs 575.75 per share. The bank will offer 2.03 crore shares to SUUTI, 76.88 lakh shares to LIC, 17.51 lakh to General Insurance Corporation of India, 7.88 lakh to New Indian Assurance Company, 3.15 lakh shares will be offered Oriental Insurance Comapny, 3.51 lakh shares to United India Insurance Company and 7.15 lakh shares to the National Insurance Company.SUUTI and LIC have agreed to subscribe to the preferential offer. However, other insurance companies are unlikely to subscribe."The preferential offer, GDR and QIP will be settled simultaneously. We will use the book building process to discover the price for both the QIP and GDR issues,'' added Nayak.
