Union Bank IPO subscription opens on 26 December

The subscription of the initial public offering (IPO) of Union Bank will commence on 26 December and continue till 30 December.

The bank received its consent from the Bangladesh Securities and Exchange Commission (BSEC) on Wednesday.

Earlier, the commission allowed the bank to raise Tk428 crore by issuing shares through IPO from the capital market with two conditions.

The first condition is the bank must invest Tk200 crore in the capital market in 2021 as per the Bangladesh Bank's circular. At the end of 2020, the lender had an investment of Tk4 crore in the capital market.

The other condition stipulates that until being listed on the capital market, the private sector lender may not declare any dividends for its shareholders.

The shares will be offered to the public at a face value of Tk10 each.

Of the total funds raised, the bank will invest Tk271.50 crore in the small and medium enterprises and project finance, Tk100 crore in government securities, and Tk50 crore in the share market. The rest will cover the IPO expenses.

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

As per the bank's draft prospectus, S Alam Group is the owner of the lender, and most of the directors are from the same business group.

The bank started in 2013 and is being operated as a full-fledged Islamic bank. Its current paid-up capital stands at Tk558.93 crore. 

According to the financial statement of the bank, its net profit was Tk98.84 crore at the end of 2020, which was 66% higher than a year ago. In 2018, its net profit was Tk95.36 crore, which was 37% higher than the previous year.

At the end of last year, its classified loans stood at Tk420 crore, which accounts for 2.52% of its total loan portfolio.