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Informist, Wednesday, Nov. 6, 2024

 

By Priyasmita Dutta and Christina Titus

 

MUMBAI – Even though the journey of lowering the government's stake in the bank--from 95.39% to 75.00%--is long, UCO Bank Managing Director and Chief Executive Officer Ashwani Kumar said Wednesday that the public-sector lender will be able to do so by the end of 2025-26 (Apr-Mar). "We will use many mechanisms like qualified institutional placement route, offer for sale and will be able to reduce the government's share by end of next year," Kumar told Informist on the sidelines of Business Standard BFSI Summit.

 

The finance ministry has asked five public sector banks to increase the minimum public shareholding to 25% by Aug. 1, 2026. This is in line with the Securities Contract (Regulation) Rules issued by the Securities and Exchange Board of India, which mandates all listed companies, including the public sector units, to have a minimum public shareholding of 25%.

 

"We will stick to the deadline, and definitely lower the stake by the set timeline," he said.

 

As the first leg of the journey, Kumar said he will meet merchant bankers and legal advisors on Thursday to seek suggestions on the proposed roadshows to raise INR 15 billion-INR 20 billion, which will aid lower the government's stake by 2-3%. At the end of June quarter, UCO Bank had announced plans to issue up to 4 billion shares, with a face value of INR 10 each, in the current financial year to help the public sector bank meet the mandated minimum public shareholding level. 

 

"So, 4 bln equity shares will bring down the government shareholding to below 75%, my public float will be more than 25% if we are through with the entire plan," Kumar had told Informist in an interview earlier. 

 

A back of the envelope calculation shows, the public-sector lender will have to raise around INR 112 billion to bring down the government's stake to 75%. Considering, the first phase of QIP will help mobilise only INR 15 billion-INR 20 billion, raising INR 112 billion will be a tall task. Kumar, however, told Informist that so far, the bank has received positive feedback from investors and so it is confident the fund-raising process will sail through comfortably. 

 

Besides UCO Bank, the other banks who do not comply with the minimum shareholding norms are Bank of Maharashtra, which is positioned comparatively better, with a public shareholding of 13.54%, followed by Central Bank of India with 6.92%, Indian Overseas Bank with 3.62%, and Punjab & Sind Bank with 1.75%.  End

 

Edited by Akul Nishant Akhoury

 

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