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In one of the largest equity capital raising issue in public sector banking segment in recent history, Union Bank of India successfully raised equity capital of Rs 5,000 crore through qualified institutional placement on Aug. 25, 2023. The issue was opened on Aug. 22 and received 100% subscription, the bank said.
The fifth largest public sector bank in India has allotted 57.77 crore shares at an issue price of Rs 86.55 per share (including premium of Rs 76.55 per share) aggregating to Rs 5,000 crore. This represents a discount of 4.9% to the floor price determined as per regulatory guidelines.
On the successful raising of capital, A. Manimekhalai, Union Bank of India managing director and CEO, said, “We are delighted to conclude one of the largest equity capital raising issue in public sector banking space in the recent past. This demonstrates the continued faith of investors on the bank's growth trajectory and prospects.”
The QIP has been subscribed by 51 mostly long-only investors. The mix of 13 foreign portfolio investors and 38 domestic institutional investors in the total allocation also ensures that Union Bank of India's shareholder base is diversified.
Manimekhalai added that the bank “has received significant and encouraging response from the market and seen participation by diversified investor base, which includes banks, asset management companies, insurance companies and foreign portfolio investors.”
According to Union Bank of India, as of June 30, the bank's capital adequacy ratio and common equity tier 1 ratio were 15.95% and 12.34%, respectively. The amount raised through the QIP issue will increase both its CET1 ratio and overall CAR by around 84 basis points each.
“The QIP proceeds will augment the capital base and help us pursue growth opportunities as we endeavour to create value for the customers and shareholders,” said Manimekhalai.
Union Bank of India's public shareholding as of June 30 was 16.51%. Following the equity capital raising, public shareholding increased to 23.01%, and government of India shareholding became 76.99%.
IIFL Securities Ltd., JM Financial Ltd., Nuvama Wealth Management Ltd. (formerly Edelweiss Financial Services Ltd.), Yes Securities (India) Ltd., ICICI Securities Ltd. and BNP Paribas were the merchant bankers and book running lead managers to the QIP issue.
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