Union Bank of India's initial public offer (IPO) of Rs 288 crore which hit the market on August 20 has been oversubscribed 4.5 times, merchant banking sources said. A single investor is believed to have made an application for Rs 80 crore worth of shares, which accounts for a little over 30 per cent of the total issue size.
This level of oversubscription is in line with other public sector bank's initial public offer (IPO) in the recent past. The issue closed today.
The bank's issue closely follows Punjab National Bank's (PNB) IPO of Rs 165 crore which saw an oversubscription of around 4.5 times. PNB's issue was priced at Rs 31 per share, which includes a premium of Rs 21.
The Union Bank issue was priced at a premium of Rs 6 on a share of Rs 10. On offer was 18 crore equity shares.
According to sources, the Union Bank issue saw a subscription of Rs 1,300 crore. The bank received around 3 lakh applications.
Post-IPO, the Centre's shareholding in the bank will be 58.33 per cent. Union Bank had received an in-principle approval from the finance ministry to return capital worth Rs 58 crore. A host of other banks including Canara Bank, Allahabad Bank, Central Bank of India are also slated to hit the market.
Meanwhile, the Rs 110 crore initial public offering (IPO) of Canara Bank is expected to carry a premium of Rs 25 a share. The exact premium will, however, be firmed up closer to the issue date.
Sources close to the bank said the premium for the IPO, which is expected in September, is being priced low so that more people can subscribe to the issue. The bank will, however, not opt for book-building. Post IPO, the government's equity in Canara Bank is expected to come down to around 73 per cent.
