UTI Bank priced a 40.49 million unit GDR deal after Tuesday's close raising $230 million pre greenshoe via Citigroup and Merrill Lynch. The all new share deal was priced at $5.91 per unit, representing parity pricing to the bank's closing share price of Rs256.65 on the National Stock Exchange.
The stock has massively outperformed the Indian market over the past year, having doubled from a low of Rs105.6 in early July 2004 and risen 38.26% year-to-date. Between the beginning of roadshows for the GDR and pricing, it rose 12%, although it went on to fall 4% the day after pricing yesterday.
The new deal is fairly dilutive to existing shareholders with bankers estimating dilution of 18%. Pre deal foreign investors owned a fairly limited 20%, although HSBC also owned a 14.7% strategic stake.
However, HSBC was unable to participate in the new deal following a recent government ruling that foreign banks are not allowed to own more than 5% without Reserve Bank of India approval. Since it remains unclear whether HSBC has this approval, bankers say it was unable to participate in the deal and there is also some uncertainty as to what will happen to its existing stake.
The Indian government remains the majority owner of the bank with a 52% stake through its holdings via Unit Trust of India, Life Insurance Corp and General Insurance Corp.
The main reason for the deal was to raise capital so the bank can expand its loan book. Its overall CAR will rise from 9.38% to 11%.
However, bankers say UTI was also keen to broaden its investor base. The final order book closed at the $1.2 billion level, with participation by roughly 70 accounts.
By geography, the book split 45% Asia, 30% Europe and 25% US. By investor type 80% were long only funds and 20% hedge funds.
UTI is currently trading around 2.7 times price to 2006 book. This is a high multiple relative to Asian comparables and towards the high end of Indian banks. HDFC, for example, trades around 3.5 times 2006 price to book and ICICI Bank around two times.