Union Bank in view of its expansion plans yesterday announced the launch of its Initial Public Offering (IPO) to raise Rs. 375 million.The bank is offering 15 million shares at Rs. 25 in three categories of 1.5 million for employees, 2.25 million for customers that have maintained accounts for a minimum of 6 months as at 31 January 2011 and 11.25 million shares for investors.
The IPO comes in the wake of a Rights Issue and a private placement that attracted investor interest. The Rights Issue of December 2010 had 10 million shares issued to existing shareholders which was oversubscribed by four times.
Subsequently, 12.5 million shares were issued via a unique tender and book building process with another 7.5 million shares being allotted to a foreign institutional cornerstone investor resulting in a total of 20 million shares being issued through a private placement which was oversubscribed thrice, reaching record levels of investor confidence.
The bank’s IPO is set to be opened on 24 February, which is being carried out with the intention of increasing its lending portfolio and launching of its new products.
The bank’s intention is to have an enhanced visibility to expand its deposit base in the future. The closing date of the issue is 16 March.
As one of the country’s last commercial banks to be listed on the Colombo Stock Exchange (CSE) it has pioneered technology based internet banking.
Partners for the IPO being Acquity and NDB Investment Bank yesterday stated that the bank is considered to be a stock with high upside potential. It is also synonymous with innovation and technology.
Union Bank is involved in the carrying out 60% of its operations for the SME sector while 40% is for corporates.
“From the investor’s point of view, Union Bank IPO is a rare opportunity in the banking sector,” Union Bank Chairman Ajita de Zoysa said. He noted that the bank has already surpassed the minimum capital requirement of Rs.2.5 billion is close to the Rs.5 billion stipulated by the Central Bank for 2015.
The bank’s branch network is expected to increase by 10 new branches in the coming months while it already has five in the north and east of the country.