Mumbai: Union Bank of India has started roadshows for its Rs2,000 crore qualified institutional placement, said two persons close to the development, on the condition of anonymity. The public sector bank will be raising funds during the first week of December.
“The roadshows will be done in Singapore, Hong Kong, London and New York beginning Monday,” said the first person mentioned earlier.
Rajkiran Rai G., chief executive and managing director at Union Bank, declined to comment on the matter.
The funds raised will help the public sector lender to boost its capital adequacy. As on 30 September, capital adequacy ratio of Union Bank of India stood at 11.22%. The firm posted a net loss of Rs1,531 crore during the second quarter of the current fiscal year as against a net profit of Rs117 crore due to front-loading of provisions.
Several public sector banks are accessing the equity markets to raise funds as investor sentiment remains positive. On 6 November, Moody’s Investors Service revised credit outlook for Union Bank of India from negative to stable, citing recapitalization programme announced by the government and improved capital buffer. The rating agency also upgraded India’s sovereign bond rating to Baa2 from Baa3 with a stable outlook last week further boosting investor interest.
During the current fiscal year, State Bank of India raised Rs15,000 crore in June through QIP, the biggest so far by any bank. In August, Vijaya Bank raised Rs700 crore through the QIP route. According to a PTI report dated 6 November, Punjab National Bank plans to raise about Rs5,000 crore as well.
Union Bank of India has appointed Edelweiss Financial Services Ltd and Jefferies as merchant bankers to handle the issue.
At 11.13am, the scrip of the public sector lender was trading at Rs169.45 a share, 0.56% down from its previous close. The benchmark Sensex was up 0.02% at 33,348.51 points.