Bidding for the share sale would continue until the early hours on Thursday. The indicative offer price is between ₹806.75 and ₹831.70 a share, bankers told ET. The indicative price is the implied discount – up to 3% in this case – to the share’s closing price of ₹831.7 on the NSE on Wednesday.
If the bank raises the entire ₹25,000 crore, it will be the largest share sale after Coal India’s ₹22,560-crore qualified institutional placement (QIP) to select bulge bracket buyers in 2015.
The bank’s board approved the placement on Wednesday. This is the third QIP by SBI. The previous round was concluded in 2017, raising ₹15,000 crore.
While state-run Life Insurance Corp (LIC) is expected to bid for a sizeable chunk, financial institutions, large domestic mutual funds and large international investors are also expected to participate, said people aware of the development. In the previous QIP, LIC had bought nearly 40% of the stake on offer.
Agencies Reduced Government Stake
In 2017, SBI’s QIP was priced at 287.25 apiece.
LIC has a 9.3% stake in the bank as of March 31, and is the largest shareholder after the central government. North Block owns 56.9%, as per the bank’s annual report.
After the QIP, the government’s holding is expected to reduce to around 55%, according to analysts. SBI’s QIP is expected to boost the bank’s common equity tier I (CET-1) ratio by around 60 basis points.
One basis point is a hundredth of a percentage point.
The objective of the capital raise is to augment CET-1 or core equity capital, rather than raise funds for growth, SBI chairman CS Setty had said in a post-earnings meet in May. He had said the current capital base can support credit growth of around Rs 8 lakh crore. “Even without raising additional capital, the growth will not be impacted,” Setty had said.
The bank’s CET-1 ratio stood at 10.81% at the end of March, higher than the minimum regulatory requirement, while overall capital adequacy ratio (CAR) was at 14.25%. But it is lower compared with peers.
Kotak Mahindra Capital Co, ICICI Securities, HSBC Securities and Capital Markets (India), Citigroup Global Markets India, Morgan Stanley India Co and SBI Capital Markets are bankers to the QIP.
Separately, SBI’s board approved raising up to Rs 20,000 crore through issuance of bonds compliant with Basel III capital norms. The approval is to raise funds via tier II and additional tier I bonds to domestic investors during the current financial year, according to the bank’s exchange filing.
SBI had raised a total of Rs 15,000 crore through tier II bonds and Rs 5,000 crore through additional tier I bonds in the previous financial year. Tier II bonds were raised in two tranches at 7.42% and 7.33%, respectively. Additional tier I bonds were priced at 7.98% in October last year.
