I-banks to pitch for ₹25,000 crore SBI QIP this week

Mint

7 days ago

State Bank of India (SBI) has invited pitches from investment banks to help it raise ₹25,000 crore through a qualified institutional placement (QIP), two people aware of the matter said.
'The investment banks will make their presentations this week," one of the persons cited above said.
The board of India's largest bank had approved the fund-raising on 3 May, its second QIP since FY18 when it raised ₹18,000 crore. A QIP is a quicker way than rights issue or follow-on offer for a listed company to raise capital by selling shares or convertible securities to institutional buyers.
On Friday, SBI shares closed 1.29% higher at ₹795.25, in line with the benchmark Nifty index that closed at 25,112.40. SBI's market capitalization stood at ₹7.09 trillion, the highest among state-run companies.
Queries emailed to SBI remained unanswered.
Also read | Borrowed time: Investors bullish on near-term upside increase leveraged bets on Tata Motors, SBI, HAL, Jio Financial
On 20 May, SBI issued a request for proposals (RFP) to hire up to six merchant bankers and other intermediaries for the fundraising plan. The selected bankers will be designated book-running lead managers, along with SBI subsidiary SBI Capital Markets Ltd.
After its QIP in FY18, there were reports that banks were advising SBI on a ₹15,000-18,000 crore QIP in FY20; however, the lender did not eventually raise these funds.
'This time around, the bank seems to be serious in its efforts to raise capital. Given the depth of the capital markets here, they want to take advantage of it and raise money. ₹25,000 crore is huge, but I think there will be enough institutional demand for this," the second person cited above said.
Apart from SBI, public sector banks including Indian Overseas Bank, Bank of Maharashtra, Central Bank of India, Punjab & Sind Bank, and Uco Bank are pursuing QIPs, Mint reported on 2 April. In 2024, QIP fundraising across sectors hit an all-time high, with 99 issues raising ₹1,41,482 crore.
Read this | Sumitomo deal gives clarity on SBI's stake: Yes Bank CEO Prashant Kumar
However, SBI has said that it has no immediate need for growth capital, and with a capital adequacy ratio of 14.2%, it has enough firepower to lend ₹8 trillion.
Chairman C.S. Setty told analysts on 3 May that every year, the bank takes an enabling resolution to balance 'growth requirements and also the need for augmenting the CET 1 (common equity tier one) capital". 'So, we do not need immediately in terms of the CRAR (capital adequacy ratio) requirement for credit growth. But we still feel that if there is an opportunity to raise equity capital, we will definitely access the market," said Setty, adding that the timing was uncertain as it wants the 'right value".
'While we cannot time the market absolutely, we will look for an opportune moment and we always, in the beginning of the year, take an enabling resolution so that we have ample time to plan our equity raising if needed…"
SBI's capital adequacy ratio stood at 14.25% as on 31 March, down three basis points (bps) from the same period last year, but was 122 bps higher than end-December. Although this was higher than the minimum regulatory requirement of 12.1%, India's largest bank lags peers in capital buffers. Private sector lender HDFC Bank has a capital adequacy ratio of 19.6%, while state-owned peer Bank of Baroda has 17.19%.
Also read | SBI Q4 results: Watch for Bhushan Steel order commentary amid muted performance
SBI's share in domestic deposits and loans stood at 22.6% and 19.72% as on 31 March. The bank reported a 10% drop in profit to ₹18,643 crore for the three months through March on the back of higher provisions.
After remaining muted for the first few months, capital market activity picked up pace beginning May. As per news reports, around 28 bulk and block deals were executed in May, compared with just seven in April on BSE. In the broader market, 274 bulk and block deals happened in NSE 500 companies, compared to 128 in April, data from Trendlyne shows.
'Other segments, including IPOs and QIPs, have been slower over the last few months due to the correction in the market. If there is an upward movement and stability demonstrated, all equity capital market categories may eventually see upward traction," Birbahadur Sachar, partner, JSA Advocates & Solicitors, told Mint last month.
And read | SBI seeks fintech partners to help customers print their own debit cards