Union Bank of India to Raise ₹5,000 Crore Through QIP

Union Bank of India to Raise ₹5,000 Crore Through QIP

Union Bank of India to Raise ₹5,000 Crore Through QIP

🏦 Union Bank of India plans to raise ₹5,000 crore through QIP, setting a floor price at ₹91.10 per share.

Union Bank of India‘s board has given the green light for a capital-raising plan through a qualified institutional placement (QIP). The public sector bank aims to raise up to ₹5,000 crore with a floor price set at ₹91.10 per share. This move is in line with the bank’s efforts to strengthen its capital base and support its growth initiatives.

Board Approval

The committee of directors of Union Bank of India convened a meeting and approved the proposal to raise capital funds through QIP. The decision was made on August 21, 2023, during the committee’s meeting.

Capital Raise Details

Union Bank of India announced its intention to raise funds not exceeding ₹5,000 crore through the issuance of equity shares via QIP. This decision is subject to obtaining the necessary regulatory and statutory approvals as applicable.

Issue Price Determination

The bank’s Committee of Directors for Raising Capital Funds is scheduled to meet on August 24. During this meeting, discussions will revolve around approving the issue price for the equity shares. Additionally, any applicable discount allowed by the SEBI ICDR Regulations for qualified institutional buyers will be considered.

Possible Discount

The bank has revealed that it might offer a discount of up to 5% on the calculated Floor Price for the QIP Issue. The actual Issue Price will be determined following consultations with the Book Running Lead Managers (BRLM) assigned to oversee the QIP Issue.

Strong Financial Performance

In its April-June quarter results for fiscal 2023-24 (Q1FY24), Union Bank of India reported a notable surge in net profit by 107% to ₹3,236 crore on a standalone basis. This growth is in comparison to ₹1,558.5 crore reported in the corresponding period last year. The increased profit is attributed to higher core income and significantly lower provisions made by the bank.

Impressive Net Interest Income

The bank’s net interest income, the difference between interest earned and interest expended, recorded a growth of 16.6% during the first quarter of the current fiscal. The figure reached ₹8,839.7 crore, surpassing ₹7,581.7 crore reported in the same period last year.

Market Reaction

On the day of this announcement, Union Bank of India’s share price experienced a decline. It closed 2.81% lower at ₹91.80 apiece on the Bombay Stock Exchange (BSE).

Conclusion

Union Bank of India’s decision to raise capital through a qualified institutional placement reflects its proactive approach to fortify its capital base and support its growth trajectory. With a strong financial performance in the latest quarter, the bank aims to maintain its momentum and further its strategic initiatives.

Disclaimer: The information provided here is for informational purposes only and should not be construed as investment advice. Always consult with financial professionals before making investment decisions.

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