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Union Bank of India (UBI) is planning to raise up to ₹3,000 crore via the qualified institutions placement (QIP) route in the current quarter (Q4FY24). The public sector bank had raised ₹5,000 crore via QIP in August 2023 at ₹86.55 per share.
The last QIP resulted in the government’s share in UBI coming down from 83.49 per cent to 76.99 per cent, with the public shareholding going up correspondingly from 16.50 per cent to 23.01 per cent.
The aforementioned QIP also helped improve the bank’s capital adequacy ratio from 15.95 per cent as at June-end 2023 to 16.69 per cent as at September-end 2023.
As per SEBI’s minimum public shareholding (MPS) norm, 25 per cent of the outstanding equity shares of a listed company must be compulsorily held by the public.
So, the proposed QIP will help Union Bank to comply with the MPS norm. The pricing of the proposed QIP is likely to be higher than the previous QIP as the bank’s share price has run up quiet a bit since August 2023.
Since August 25, 2023, when the previous QIP closed, UBI’s share price has gone up by ₹50.46 to close at ₹139.95 per share as on January 24, 2024, on BSE.
“We have a board approval to raise capital to the tune of ₹8,000 via equity in the current financial year,” A Manimekhalai, MD and CEO, UBI, said in an interaction with analysts.
She noted that ₹62,000 crore worth of loan portfolio, which is linked to MCLR (marginal cost of funds-based lending rate), will get re-priced higher in the current quarter.
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