Union Bank primary shares draw 3.62 times higher offers

Against its Tk428 crore primary shares, Union Bank has received offers of Tk1,548 crore from investors which is 3.62 times higher than the initial public offering (IPO) size. 

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

Earlier, the country's premier bourse completed its eligible investors' portion on an electronic subscription system. 

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

Earlier, the Bangladesh Securities and Exchange Commission allowed Union Bank to raise Tk428 crore from the capital market upon two conditions.

First, the bank must invest Tk200 crore in the capital market in 2021 as per Bangladesh Bank's circular. At the end of 2020, the lender had an investment of Tk4 crore in the capital market.

The other condition stipulates that until being listed on the capital market, the private sector lender may not declare any dividends for its shareholders.

The shares will be offered to the public at a face value of Tk10 each.

Of the total funds raised, the bank will invest Tk271.50 crore in SMEs and project financing, Tk100 crore in government securities, and Tk50 crore in the share market. The rest will cover IPO expenses.

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

As per the bank's draft prospectus, S Alam Group is its owner, and most of the directors are from the same business group.

The bank started in 2013 and its paid-up capital is Tk558.93 crore. It is operating in the country as a full-fledged Islamic bank.

According to its financial statement, the bank's net profit was Tk98.84 crore at the end of 2020, which was 66% higher than a year ago. In 2018, its net profit stood at Tk95.36 crore, which was 37% higher than in 2019.

At the end of last year, its classified loans stood at Tk420 crore, which was 2.52% of its total loan portfolio.