United Bank of India, a Kolkata-based public sector lender, on Wednesday said it will

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offer a discount of 5 per cent to retail investors in its initial public offer. The bank has fixed the price band for the shares it is offering in the IPO at Rs 60-66. The IPO will open on February 23 and close on February 25.

At the upper end of the price band, the bank will raise about Rs 330 crore of equity capital, said Satish C Gupta, chairman and managing director of the bank. At present, the bank is 100 per cent owned by the government. The IPO will lead to dilution of the government’s stake by 15.8 per cent. In the half year ended on September 30, 2009, the bank reported a net profit of Rs 231.10 crore. It had total assets of Rs 71,952.25 crore and networth of Rs 2,769.87 crore.

About 25 lakh shares will be reserved for employees, and 30 per cent of the issue will be reserved for retail investors. “Pricing is a key issue. The bank has a strong presence in the east and the north-eastern regions. We will also market it in the remote corners of the country so that there is a widespread participation. Investors in Gujarat and Mumbai understand the value of investing in public sector bank stocks,” said S Vishvanathan, managing director of SBI Capital Markets.

At least 60 per cent of the net issue shall be allotted on a proportionate basis to qualified institutional buyers and 5 per cent of the QIB portion shall be available for allocation only to mutual funds and the remaining QIB shall be available for allocation to all the QIB bidders, including mutual funds, subject to value bids being received at or above the issue price.The lead book runners to the issue are SBI Capital Markets, Edelweiss Capital and Enam Securities.