Union Bank files for Tk428cr IPO

Union Bank has filed an application with the Bangladesh Securities and Exchange Commission to raise Tk428 crore from the capital market through an initial public offering (IPO) under the fixed price method.

It filed the application on Monday.

Of the amount, the bank will invest Tk271.5 crore in SME and project finance, Tk100 crore in government securities, Tk50 crore in capital market, and Tk6.5 crore in meeting IPO expenses. 

Prime Bank Investment is working as the issue manager, and Brac Epl Investments as the co-issue manager, of the bank for the IPO. 

Incorporated on 7 March 2013, the bank is going public to comply with a regulatory requirement. 

It will enjoy reduced tax benefits – from 40% to 37.5% – if it gets listed, its officials said.  

They said the bank wants to be listed to ensure accountability and transparency, have access to the capital market, and attract depositors, clients, and potential employees.   

As per the rule, the bank shall issue public shares within three years from the date of commencement of the banking business. Public issues shall at least be equal to sponsors' share amount.

The bank follows the principles of sharia banking to provide all kinds of commercial banking services to all types of customers.

In the year ending on 31 December 2020, its net profit was Tk98.84 crore, up from Tk59.45 crore in the previous year.

Also, its earnings per share stood at Tk1.77, up from Tk1.06 in the previous year.

As per the company's prospectus, its investment income was Tk1974.01 crore, and operating income Tk595.91 crore, in 2020. 

Besides, its retained earnings were Tk145.24 crore while total asset was Tk21,003 crore. 

Its return on assets and return on equity were 0.51% and 11.23% respectively.

Until March 2021, the lender's total classified loan stood at Tk430 crore while total outstanding loan was Tk17,654 crore. Moreover, the amount of bad loans was Tk104 crore.  

As per the Bangladesh Bank, the ratio of gross nonperforming loans to total outstanding loans in the banking sector stood at 8.48% until March this year.

Union Bank's authorised capital is Tk1,000 crore, and paid-up capital Tk558.93 crore.

It operates 96 branches, 23 sub-branches, and nine palli bidyut bill collection booths all over Bangladesh.