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OUR BANKING BUREAU
MUMBAI, Sept 28: UTI Bank's Rs 73.50-crore initial public offer (IPO), which closed on Monday, has been oversubscribed. According to market sources, the bank's maiden issue has been oversubscribed by over two times.
UTI Bank officials said that the issue has drawn overwhelming response and a large chunk of the subscriptions had come in from the retail segment. However, they refused to spell out the exact quantum of oversubscription. ``It has evoked good response from institutional investors as well,'' UTI officials said.
The bank made a fresh offering of 1.50 crore equity shares of Rs 10 each at a premium of Rs 11 per share amounting to Rs 31.50 crore, while its promoter, Unit Trust of India has offloaded two crore equity shares at a price of Rs 21, totalling Rs 42 crore, in favour of the public.
Post-issue, UTI's stake in the bank has dropped to 61.54 per cent from the earlier level of 86.95 per cent. While no reservation was made for non-resident Indians (NRIs) and overseas corporate bodies (OCBs),UTI Bank reserved 2.2 lakh shares for its employees under preferential allotment. UTI Bank's capital adequacy ratio which stood at 9.72 per cent before the issue, will now rise substantially.
The bank has forecast a 45 per cent rise in its interest income during 1998-99, while other income is expected to rise to Rs 73.50 crore from Rs 60.90 crore in 1997-98. The bank expects its deposit base to increase by 25 per cent during the year with an average level of Rs 3,000 crore. Advances are expected to increase by 32 per cent and are likely to be at an average level of Rs 1,925 crore.
Analysts are of the view that this target can be achieved despite the economic downturn, given the small base of the bank. UTI Bank's deposits during 1997-98 grew by 94 per cent to Rs 2,731 crore while advances grew by 136 per cent to Rs 1,627 crore.
Among the nine new private sector banks, UTI Bank has the highest level of non-performing assets (NPAs). The bank's net NPAs for the year ended March 31, 1998, stood at 5.63 percent.
The success of the issue augers well for the other new generation private sector banks which are set to hit the market in the current fiscal. While IDBI is in the process of drawing up plans for its IPO, Centurion and TimesBank have been planning to defer their maiden public issues. However, the Reserve Bank of India has categorically said all new private sector banks must hit the market by March 1999 and the deadline will not be relaxed under any circumstances.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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