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State Bank of India (SBI) kicked off its Rs 25,000-crore share sale to institutional investors; Details
State Bank of India
SBI Launches QIP: State Bank of India (SBI) kicked off its Rs 25,000-crore share sale to institutional investors late Wednesday, marking the largest equity capital raise by an Indian entity and the first such move in eight years by the country’s most valuable public sector bank.
The qualified institutional placement (QIP) opened after market hours, with bidding expected to continue into early Thursday. According to reports, the offer price is likely to be in the range of Rs 806.75 to Rs 831.70 per share, representing up to a 3% discount to Wednesday’s NSE closing price of Rs 831.70.
If fully subscribed, this would surpass Coal India’s Rs 22,560-crore QIP in 2015, becoming India’s biggest-ever share sale via this route. SBI’s board approved the QIP on Wednesday — the third in the bank’s history, following a Rs 15,000-crore issue in 2017.
LIC, Global Funds Likely to Participate
Among expected bidders are state-run Life Insurance Corporation of India (LIC), large domestic mutual funds, financial institutions, and international investors. LIC, which holds a 9.3% stake in SBI as of March 31, had picked up nearly 40% of the 2017 QIP.
The central government, SBI’s majority shareholder, owns 56.9% of the bank, as per its latest annual report. Analysts estimate the government’s holding could fall to around 55% post-issue.
Strengthening Capital Buffers, Not Just for Growth
The QIP is aimed at bolstering SBI’s common equity tier I (CET-1) capital ratio by around 60 basis points. SBI Chairman C.S. Setty previously said that the bank’s existing capital could support additional credit growth of nearly Rs 8 lakh crore, and that the QIP is meant to strengthen the capital base, not fund immediate growth.
As of March-end, SBI’s CET-1 ratio stood at 10.81%, above the regulatory minimum, while its overall capital adequacy ratio (CAR) was 14.25%. However, this is still lower compared to some private sector peers.
QIP Lead Managers and Additional Bond Raise
Kotak Mahindra Capital, ICICI Securities, HSBC Securities and Capital Markets (India), Citigroup Global Markets India, Morgan Stanley India, and SBI Capital Markets are managing the QIP.
Separately, the SBI board has also approved raising up to Rs 20,000 crore through the issuance of Basel III-compliant tier II and additional tier I bonds during the current fiscal year. In FY24, the bank had raised Rs 15,000 crore via tier II bonds and Rs 5,000 crore via AT-1 bonds. The tier II bonds were priced at 7.42% and 7.33% in two tranches, while the AT-1 bonds were issued at 7.98% in October 2023.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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