Union Bank goes for IPO

Offers 15 m shares, issue opens on February 24:

Harshini PERERA

Union Bank expects to diversify into capital market related operations and also target three digit growth rate.

Union Bank has decided to go for an Initial Public Offering (IPO) with issuance of 15 million ordinary shares to raise Rs 375 million for the expansion of its services more to the Small and Medium Entrepreneurs and Retailers. The share issue will be open on February 24 2011.

A share will be issued at Rs 25 in three categories to employees, customers and ordinary investors.

In the first category 1.5 million shares will be issued for employees while 2.25 million shares will be issued for Union Bank customers. In the third category, 11.25 million shares will be issued for other investors, Union Bank of Colombo, Director and CEO Anil Amarasuriya said at the announcement of the IPO.

The prospectus and applications will be available for investors from February 10.

Union Bank after its successful rights issue and a private placement expects to increase lending through the funds from the share issue. There were 10 million shares issued to existing shareholders through a Rights Issue in December, 2010. Another 20 million shares are being issued through a Private Placement.

“There are 21 Union Bank branches located in the island including the North and East. The branch network will be expanded three times after four years of the IPO. The company is heading towards the future with three digit growth and will continue the growth rate,” he said.

Union Bank expects to launch new products and diversify to capital market related operations and trade sharing. Union Bank will be a niche bank for SMEs and retailers with 60 percent commitment while corporate sector will have 40 percent commitment in the future.

“We have already surpassed the minimum capacity requirement of Rs 2.5 billion and are close to the Rs five billion stipulated by the Central Bank for 2015,” Union Bank of Colombo Chairman Ajita de Zoysa said.

Milford Holdings Private Limited a subsidiary of Distilleries Company of Sri Lanka PLC has entered in to a Share Sales and Purchase Agreement with Union Bank of Colombo Limited and Ennid Capital Private Limited to sell 51 percent and 19 percent respectively, of the issued capital of National Asset Management Limited (NAMAL), Colombo Stock Exchange filing said yesterday. The completion of the sale will take place once the relevant regulatory bodies approve the change of ownership in NAMAL. Milford Holdings is expected to receive Rs 454.9 million as the full consideration for this 70 percent stake in NAMAL, it further said.