Big draw for Union Bank private placement

Tuesday, 28 December 2010 00:01 - - {{hitsCtrl.values.hits}}

The private placement of Union Bank has triggered significant response with the issue closing yesterday.

Union Bank offered 12.5 million shares via the unique private placement incorporating a tender basis and a book building process. The minimum bid was Rs. 26 per share.

Sources said that the placement had received bids as high as Rs. 34 per share whilst the biggest application was at Rs. 30 per share. Previously 7.5 million shares were placed with a foreign institutional shareholder at Rs. 28 each, bringing the total offered via private placements to 20 million shares.

The private placement comes hot on the heels of Union Bank successfully completing a Rights Issue worth Rs. 250 million (10 million shares at Rs. 25 each) prior to Christmas.

These two issues along with an Initial Public Offering (IPO) slated for February are part of Rs. 1.1 billion fund raising exercise by Union Bank to boost its capital. The IPO will be priced at Rs. 25 per share. The Bank in a statement last week said the innovative fund raiser consisting of a Rights Issue, a Private Placement and a subsequent Initial Public Offering has received remarkable and an overwhelming level of attention from both local and foreign investors. The Rights Issue concluded on 2 December had been oversubscribed by four times. Via the IPO, Union Bank will offer 15 million shares.

Analysts state that this is a much sought after and a rare investment opportunity. The Bank is working with its advisors NDB Securities and Acuity on the proposed IPO. On completion of this multi-stage process, the Bank will fulfill all Central Bank requirements pertaining to capital adequacy until year 2015.

Anil Amarasuriya, Director/Chief Executive Officer of Union Bank in a statement last week said: “The over subscription of the Rights Issue highlights the confidence expressed by our existing shareholders.”

“We are entering an exciting phase, the country’s Per Capita Income is expected to double in five years and the banking industry is poised as a key growth sector thus, concurrently highlighting exciting future opportunities for Union Bank,” he added.

The Bank plans to raise in excess of 1.1 billion through the above funding methodologies and expects to support the implementation of the Bank’s ambitious expansion and consolidation programmes in the next couple of years. To this effect, we will be making further announcements on our Organic and Inorganic growth plans for the Bank he said.

Indubitably one of Sri Lanka’s fastest growing banks, Union Bank will soon be a force to reckon with in the Banking industry offering advanced banking solutions to both the Small and Medium Enterprise and Retail sectors in Sri Lanka. Amarasuriya stated that the Bank’s plans are on track, supported by sound financial standing, network expansion; value addition to its products, image building, and technology upgrades the Bank is well geared to becoming a power house in banking.

An indigenous bank, Union Bank has since it commenced operations in 1995, chalked up many successes, including the introduction of many firsts to the banking industry. The Bank currently has 20 branches including five in the North of Sri Lanka and is expected to open up to 10 new branches in the coming months.