'UCO follow-on offer likely by mid-June'

Public sector lender UCO Bank is hoping to come out with its follow-on offer (FPO) by the middle of next month. The bank hopes to raise around Rs 500 crore by issuing six crore equity shares.

“We hope to come out with the FPO by mid-June,” said Chairman and Managing Director SK Goel.

The FPO is expected to bring down the government shareholding from 63.59 per cent to 58.60 per cent. Earlier, the bank was also mulling to raise funds through qualified institutional placement (QIP), but ultimately shelved the proposal.

“In general, the government prefers FPO, as the shareholding is broadbased. In QIP, the shares are concentrated in few hands. However, the cost is much less in QIP,” Goel had earlier said.

As part of capital restructuring in March 2009, the bank had received Rs 450 crore, out of the proposed Rs 1,200 crore.

In December 2008, the bank restructured its equity capital by converting Rs 250 crore out of the total equity capital of Rs 799.36 crore into perpetual non-cumulative preference shares.

The capital restructuring led to the government stake coming down from 74.98 per cent to 63.59 per cent.

Also, it has sought Rs 1,500 crore from the government in the current financial year. The capital adequacy ratio of the bank stood at 13.21 per cent in the last quarter, against 11.93 per cent in the same period last year.

The bank has set a credit growth target of 20 per cent this financial year.