UTI Bank to offer 33% to pvt equity players to cut UTI stake

New Delhi, Aug 31: UTI Bank is planning to offer 30 to 33 per cent stake to private equity players in this fiscal and has kept options open for inclusion of a strategic partner and merger with another bank after some years.

“We had a choice of overseas listing and private equity model. We chose the latter. We are trying to raise over Rs 40 crore by offloading 30-33 per cent stake,” UTI Bank chairman, PJ Nayak, told reporters after signing a memorandum of understanding with the Department of Post here.

The move is part of the Reserve Bank’s directive to private banks to reduce promoters holding to a maximum 40 per cent. UTI Bank’s promoter Unit Trust of India currently holds 60 per cent in the bank.

Nayak said UTI bank may rope in more than one private equity partner. But he declined to give names of the players or the premium amount that the bank intends to charge over and above the share price currently at about Rs 28. Cholamandalam Cazenov Securities are advising the bank on pricing of the equity offer, expected to be finalised shortly.

After the equity offer, Nayak said the bank’s paid-up equity would go up by Rs 40 crore from the present Rs 130 crore while capital adequacy ratio (CAR) was expected to go up to about 11 per cent from the present 9.0 per cent.

UTI bank may go for a small private placement of bonds to shore up its Tier-II capital from the current Rs 150 crore.

Asked about overseas listing, he said the bank was open to the idea in the future. “We are also not averse to inclusion of a strategic partner, either a bank or insurance company, or a possible merger after some years,” Nayak added.

Ruling out mergers in the short term, Nayak said UTI Bank tends to grow organically now through various initiatives including its initiatives with Department of Post for cross selling of products and setting up of ATMs in post offices.

He said the Bank doubled its balance sheet to Rs 10,500-11,000 crore last year and intends to increase it further by 30-40 per cent. The bank plans to increase its business by over 30 per cent to Rs 18,000 crore this fiscal from Rs 14,000 crore last fiscal, the UTI Bank chief said.

-- PTI