Lanka Rating Agency has placed Union Bank of Colombo’s respective long- and short-term financial institutions ratings of BBB and P3 on a Rating Watch, with a Positive outlook.

The rating watch was triggered by the announcement on August 14 from the company to the Colombo Stock Exchange (CSE) that the Board of Directors had resolved to issue by way of private placement 742,156,249 ordinary voting shares at a consideration price of Rs 15.30 to Culture Financial Holdings (CFH) an affiliate of TPG a leading global private investment firm with over $59 billion of capital under management.

Under the agreement, TPG will invest up to 70% of the issued share capital, and warrants that, if exercised in full within their six-year term, would increase TPG’s interest in UBC to 75%. The Central Bank of Sri Lanka (CBSL) approved TPG’s investment in UBC on August 6, 2014.

Following the private placement, the Investor is expected to make an offer under the Company Takeovers and Mergers Code 1995 (as amended in 2003) to the other shareholders of UBC to acquire up to the number of shares that the Investor may acquire and hold under the approval granted by the CBSL.

The issue of the shares under the private placement, the issue of the warrants and the general offer are subject to certain conditions, including, but not limited to shareholder approval of the transaction and certain regulatory approvals. UBC is expecting to leverage on TPG’s operational expertise and global resources to strengthen Union Bank’s balance sheet and expand its franchise.