UBI gets finmin nod for IPO

KOLKATA: After much dilly-dallying, the finance ministry has allowed Kolkata-based United Bank of India (UBI) to go public. UBI is slated to hit the capital market by end-January or early-February 2010 to mop up about Rs 350 to 400 crore of fresh resources, although much will hinge on the premium that is yet to be determined. The bank proposes to issue 5 crore equity shares with a face value of Rs 10 each at a premium.

At present, the government own 100% stake in UBI. Post-IPO, government holding will decline to around 85%.
The government has already allowed UBI to recast its capital and reduce the paid up component to Rs 266 crore from Rs 1,532 crore as a precursor to the IPO exercise. The change will get reflected in UBI’s books after December.

“After the capital restructuring exercise, the book value of a UBI share will be Rs 104. On that basis, the minimum premium could be Rs 62 per share over a face value of Rs 10 each,” UBI’s chairman and managing director SC Gupta. UBI had sent its IPO proposal to the government in December 2008.