UBI IPO fully subscribed on first day

The initial share sale offer of public sector lender United Bank of India got fully subscribed on the first day of issue today.

The issue received bids for 5.80 crore shares, against five crore shares on offer, thereby generating a demand of 1.16 times till 1500 hrs, according to the data available with the National Stock Exchange.

The PSU lender plans to raise up to Rs 330 crore from the capital market and has fixed the price band for the issue at Rs 60-66 a share.

Post issue, the government's stake in UBI would come down to 84.2 per cent from the existing 100 per cent, resulting in a stake dilution of 15.8 per cent.

The company would also offer a five per cent discount over the issue price at the time of allotment of shares to retail investors.

Brokerages feel that the IPO price band has been fixed at somewhat a discount to that of its 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," Brokerage firm Sharekhan said.

The bank would utilise the proceeds to expand its balance sheet and augment 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.