Union Bank IPO subscription begins on December 26

The Union Bank Limited will open initial public offering (IPO) subscriptions for Tk 428 crore public issues on December 26 under the fixed price method, which will be the largest IPO in the banking sector.

The investors will subscribe for the IPO shares through the electronic subscription system until December 30.

The Sariah-based bank will offload 42.4 crore ordinary shares with a face value of Tk 10 each. It will utilise the proceeds in financing SMEs and different projects, buying government securities, investing in the stock market, and meeting IPO expenses.

The Bangladesh Securities and Exchange Commission (BSEC) extended its consent for the IPO issuance on September 5.

However, the stock market regulator imposed two conditions for the IPO. The bank must invest Tk 200 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 denotes the private sector lender is not allowed to declare any dividends for its shareholders until being listed on the capital market.

As per the audited financial statements for the year ended on December 31, 2020, the bank’s net asset value per share (without valuation) and five years weighted average earnings per share were Tk 16.38 and Tk 1.82 respectively.

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

The commission has allowed the banks to disburse 15 per cent of IPO shares to their employees with a lock-in period for two years.

The bank has the total number of branches was 95 at the end of 2020 out of which 47 situated in urban areas and 48 are in rural areas.