Under the agreement, the company will buy up to 75% of UBC through a combination of primary and secondary shares and warrants, in what is billed as one of the largest foreign direct investments into Sri Lanka in recent years.
The exercise of the warrants is expected to take the value of the transaction to $117m.
TPG Asia managing partner and co-head Tim Dattels said: "As a strategic and first-time investor in Sri Lanka, we are very encouraged by the country’s economic growth momentum and the Central Bank’s policy initiatives to enhance the country’s banking sector.
"We see great growth potential in Union Bank to emerge as one of the top five local commercial banks in the country."
Union Bank chairman Alex Lovell said: "TPG is one of the leading and most experienced private investment firms with an unrivalled investment track record in the financial services sector in Asia.
"Union Bank will be able to tap into TPG’s operational expertise and global resources to not only strengthen Union Bank’s balance sheet but also introduce new products and expand our network in order to offer better services to our customers."
The transaction is expected to strengthen the UBC’s Tier 1 capital and enable the bank to meet the minimum capital requirement of LKR10bn ($768m) set by the Central Bank of Sri Lanka, effective January 2016.
