State owned Union Bank of India has raised Rs 3000 crore through a qualified institutional placement (QIP) allowing the bank to deepen its capital and also reduce its government holding below the regulatory ceiling of 75%, multiple people aware of the details said.
Demand was ten times the amount required as large local and overseas investors lined up for a piece of the issue these people said.
BlackRock Inc the world’s largest investment manager with close to $10 trillion in assets along with Hong Kong based Segantii Capital Management, Millenium Management LLC along with local investor SBI Life Insurance, ICICI Prudential Life Insurance and Nippon Asset Management led institutional investors in bidding for the bank’s shares.
“The shares were issued at about Rs 136 a piece a discount to the Rs 142.78 per share floor price set by the bank according to the SEBI formula. The issue is open until Thursday following which the allotment details will be clear,” said a person aware of the details.
This is the second time the bank has sold shares through the QIP route this fiscal. It had raised Rs 5000 crore in August to augment its capital base and reduce its government holding. “With this QIP the bank has completed Rs 8000 crore of equity raise this fiscal. This will imprve the bank’s capital adequacy by about 50 basis points but more importantly, it will bring down the government stake below 75%,” said a second person aware of the details.
IDBI Capital Markets, BNP Paribas and HDFC Bank are among the bankers to the issue.
The bank’s capital adequacy ratio was at 15.03% as of December 2023 is likely to improve above 15.50%. The bank did not immediately reply to an email seeking comment.
Results released last month showed that the bank’s profit rose 60% year-on-year to Rs 3,590 crore for the third quarter that ended December 2023 largely due to a sharp fall in provisions. The bank’s provisions on non-performing assets halved to Rs 1,226 crore from Rs 2,443 crore in the year ago period. On Wednesday, the bank’s shares jumped 7% to Rs 151 a piece following the QIP announcement on Tuesday evening. It was trading at Rs 145 per share later in the day, up 3% from Tuesday’s close of Rs 141 per share.
