Dr. Senthilverl buys 6.5% stake in Union Bank for Rs. 445 m, Sampath exits
High net worth but low profile investor Dr. T. Senthilverl yesterday picked up a 6.5% stake in Union Bank Plc (UBC) for Rs. 445 million and the move boosted sentiments, pushing the stock price further.
The market saw a total of 23.6 million UBC shares traded for Rs. 485 million. Of that quantity 21.7 million shares were done via crossing at Rs. 20.50 each. UBC hit an intra-day high of Rs. 21.70 before closing at Rs. 21.20, up by 70 cents.
Dr. Senthilverl is not a newcomer to UBC as he is believed to be one of the original shareholders though not figured in the top 20 list.
The seller was Sampath Bank and with yesterday’s move it has exited from UBC. As at June 2014, Sampath Bank was the second largest shareholder with a 7.5% stake.
Prior to yesterday it had shed a smaller stake. Analysts said the exit by Sampath made sense as the stake remained passive. With banking sector consolidation likely to gather momentum in 2015, Sampath Bank is likely to be focused elsewhere. Speculation has been Sampath will look at Pan Asia Bank, with control of both entities held by business leader Dhammika Perera.
The exit also comes after UBC struck a mega deal with TPG Capital, under which the the USA-based global private investment firm with $ 60 billion under management will take up an over 70% stake in stages through a combination of primary and secondary shares and warrants.
In August the UBC Board of Directors resolved to issue by way of a private placement 742,156,249 ordinary voting shares of the bank at a consideration of Rs. 15.30 per share and also resolved to issue to the investor, simultaneously with the issue of the private placement shares, 218,281,250 warrants at a consideration of Rs. 0.30 per warrant, conferring the investor with the right to subscribe to one new ordinary voting share per warrant within a period of six years from the issue of such warrants at a exercising price of Rs. 16 per share.
This investment results in Union Bank as a standalone entity to be placed second in stated capital in the banking industry and be within the top five private banks in Sri Lanka with regard to equity.
Under the agreement with UBC to acquire majority control of 70% at Rs. 15.30 per share (almost equal to UBS’s book value), TPG will be paying Rs. 25 per share in the subsequent mandatory offer to minority shareholders.