Union bank

Union Bank’s core stock attracts 3.62 times higher bids

Against its primary shares of Tk 428 crore, Union Bank received offers of Tk 1,548 crore from investors, which is 3.62 times larger than the initial public offering (IPO) size.

On Sunday, the Dhaka Stock Exchange (DSE) will hold an allotment of principal shares of the next-generation private sector lender from among the successful applicants.

Earlier, the country’s top exchange completed its share of eligible investors on an electronic subscription system.

The subscription to the IPO was held from December 26 to 30 last year.

Previously, the Bangladesh Securities and Exchange Commission allowed Union Bank to raise Tk 428 crore in the capital market on two conditions.

First, the bank is to invest Tk 200 crore in the capital market in 2021 as per the Bangladesh Bank circular. At the end of 2020, the lender had an investment of Tk4 crore in the capital market.

The other condition states that until it is listed on the capital market, the private sector lender cannot declare any dividends to its shareholders.

The shares will be offered to the public at a nominal value of Tk 10 each.

Of the total funds raised, the bank will invest Tk 271.50 crore in SME and project finance, Tk 100 crore in government securities and Tk 50 crore in the equity market. The rest will cover IPO costs.

Prime Bank Investment and Brac EPL Investment are the issue managers of the bank’s IPO.

According to the bank’s draft prospectus, the S Alam Group is the owner and most of the directors belong to the same group of companies.

The bank was started in 2013 and its paid up capital is Tk 558.93 crore. It operates in the country as a full-fledged Islamic bank.

According to its financial statements, the bank’s net profit was Tk 98.84 crore at the end of 2020, up 66% from a year ago. In 2018, its net profit was Tk 95.36 crore, 37% higher than in 2019.

At the end of last year, its classified loans stood at Tk 420 crore, or 2.52% of its total loan portfolio.