United Bank files for IPO

Kolkata-based United Bank of India (UBI) has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for an initial public offer (IPO). The issue size will be Rs 50 crore. The bank had appointed SBI Capital Markets (lead merchant banker), Enam Securities and Edelweiss Capital as merchant bankers for the issue, T M Bhasin, executive director, UBI, said.

The government's stake after the issue will come down to 84.20 per cent.

The bank expects to raise Rs 350-400 crore through the issue, depending on the market conditions.

Earlier, SC Gupta, chairman and managing director of the bank had said the bank planned to issue 50 million shares with aface value of Rs 10 each.

The IPO is expected to be launched by the last week of January or the first week of February 2010.

The government has already restructured and reduced the equity capital of the bank from Rs 1,532 crore to Rs 266 crore by allowing transfer of Rs 1,266 crore to the capital reserve account. With this, the book value of Rs 10 per share of the bank has gone up to Rs 104 per share. This will be close to Rs 94 per share after the IPO.

The bank expects to get another Rs 550 crore capital before March 2010. Subsequently, the book value per share of the bank would be close to Rs 125, said Bhasin.

The bank had kept options like follow-on-public (FPOs) at a later stage to raise more capital, he said.

At present, UBI and Punjab &Sind Bank are the two nationalised banks yet to get listed on the stock exchanges.

In March this year, the government had contributed Rs 250 crore as Tier-I capital at UBI.