TPG says to acquire maximum 70% in Union Bank
View(s):TPG, the USA-based global private investment firm has informed Union Bank (UB) that they’ll acquire up to 70 per cent of the latter as permitted by law under the mandatory offer, at an offer price of Rs 25 per share, according to a circular to shareholders.
This will provide TPG with an aggregate shareholding of up to a maximum of 70 per cent of the issued shares of the bank. UB announced recently that it has finalized an investment agreement with the US-based global investment giant TPG in which the latter is investing Rs. 15 billion in the local bank.
“In terms of section 12(1C) of the banking Act no person can acquire a material interest (i.e. holding more than 10 per cent of the issued capital carrying voting rights in a licensed commercial bank incorporated or established within Sri Lanka by or under any written law without the prior written approval of the Monetary Board given with the concurrence of the Minister in charge of finance,” the circular said.
It added that the approval of the Monetary Board referred to above is for the investor to acquire only up to 70 percent of shares of the company and to acquire up to a further 5 per cent of the shares of the company pursuant to the exercise of Warrants, which would increase the investor’s shareholding in the company to up to 75 per cent. CB brought in minimum ownership of banks to promote better corporate governance and to reduce the concentration of ownership and to address conflicts of interest that may arise due to large shareholdings. Current rules say that a single entities’ material share ownership is generally limited to 15 per cent of a bank’s share capital with Monetary Board’s approval. Under the deal, TPG will invest up to approximately $117 million in UBC through a combination of primary and secondary shares.