UTI Bank GDR issue subscribed seven times

UTI Bank's issue of 40.49 million global depository receipts (GDR) for $239.3 million (excluding the green shoe option of $35.9 million) has been subscribed seven times.

The issue was priced at $5.91 per GDR and the receipts were listed today on the London Stock Exchange. The bank has filed a Section 144 (A) report with the US' Securities and Exchange Commission (SEC) which will make the GDRs accessible to US institutional investors.

The bank today appointed Citigroup Global Markets as its stabilisation agent for the period between March 16, 2005 and April 14, the bank said in a media statement.

The stabilisation agent checks any volatility in the stock price by buying and selling shares in the market. "We witnessed strong investor interest from Asia, Europe and the US," UTI Bank chairman and managing director PJ Nayak said in a statement.

"Considering the overwhelming response, the bank is planning to exercise the green shoe option of around 6.07 million GDRs ($35.9 million). However, a final decision will be taken next week," Nayak said.

The capital will support the bank's growth for the next two-three years. A fresh infusion of capital will enable the bank raise its capital adequacy ratio from the current level of 9.38 per cent to over 11 per cent.

The fresh issue of capital infusion will lead to a 20 per cent dilution in the holdings of existing shareholders.

After the capital infusion, UTI-I's stake in the bank will come down from 33.32 per cent to around 27 per cent, Life Insurance Corporation's holding will dip from 13 per cent to about 11.50 per cent, General Insurance Corporation's holding from 3 per cent to 2.5 per cent and HSBC's holdings from 14 per cent to 12 per cent. The foreign holding in the bank will go up from 32 per cent to around 43 per cent.

Citigroup International and Merrill Lynch were the co book runners to the issue, while ABN Amro and RothsChild were the joint lead managers to the issue.