SBI plans Rs 25,000 crore QIP, first share sale in eight years
(SBI) is in advanced stages of appointing six banks to raise upto Rs 25,000 crore via a qualified institutional placement (QIP), its first share sale in eight years as India's largest lender seeks to shore up its common equity tier 1 (CET-1) from 11% at the end of March 2025.
Kotak Mahindra Capital Co, ICICI Securities Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, Citigroup Global Markets India Pvt Ltd, Morgan Stanley India Co Pvt Ltd and SBI Capital Markets Ltd are among banks that have been finalised to manage the fund raise for the bank, people familiar with the information said.
SBI's last QIP was in 2017. SBI had raised Rs 15,000 crore by selling 52.2 crore shares through the QIP in June 2017.
Emails sent to SBI and all the six investment banks did not immediately elicit any response.
The bank's board had approved the QIP on May 3. If the bank raises Rs 25,000 crore, it will be the largest share sale through a QIP in India. A QIP is a faster alternative to a rights issue or follow-on public offering because such money is raised in bulk from large institutional investors.
'The bank wants to augment its CET 1 ratio which is the lowest among public sector banks. Growth wise the bank is well placed with the RoE of 19% is much ahead of the 12% loan growth. But capital can now be raised to cushion the CET which is the plan,' said one of the people.
The bank is likely to hit the market in the next couple of months. As in the case of the previous QIP when Life Insurance Corporation bid for half the size, this time too, the insurance company is likely to bid for a substantial size. LIC has 9.38 percent stake in the bank as of March 31 and is the largest shareholder in the bank after the central government which owns 57.43 percent. SBI shares gained 1% to Rs 800 a piece on the BSE on Wednesday.
A final call on the timing and the size will be decided by the bank based on the market conditions.
This fiscal SBI will also receive money from the sale of 13.19% stake in
Yes Bank
to Japanese lender Sumitomo Mitsui Banking Corporation (SMBC). It also holds a 5.19% in National Stock Exchange which will yield it a substantial sum whenever the stock exchange lists.
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