SBI raises Rs 8,032 cr in country's biggest QIP issue

State-owned bank SBI has raised Rs 8,032 crore by selling shares through qualified institutional placement, making it the biggest ever equity sale via this route, but largely aided by LIC.

The bank sold 5.13 crore shares at an average price Rs 1,565 apiece, which was the lower side of the price band it had set.

The price band, determined by the pricing formula of market regulator Sebi, was fixed at the upper band of Rs 1,629.35 -- around 2 per cent premium on Tuesday's closing price of Rs 1,595.95 a apiece.

SBI shares ended the day at Rs 1517.55 on BSE, down 3.56 per cent from its previous close.

Under the Sebi norms, an issuer can offer shares through qualified institutional placement or QIP at a premium or discount of maximum 5 per cent to the Sebi-formulated price band.
The gross issue size, upon allotment of equity shares, will be Rs 8,032 crore, making it the largest QIP equity issuance to date in the country, State Bank of India (SBI) said in a statement late this evening.

Post-equity allotment, government stake will come down to 58.6 per cent from over 62 per cent, the bank added.

SBI Chairperson Arundhati Bhattacharya said: "QIP saw participation from a wide range of domestic and international investors. That the offering successfully withstood a challenging global and emerging market backdrop underlines the strength of SBI and investor confidence in its equity story."

She further said post-QIP the bank will meet its target of capital raising for the current year. The fresh inflow will substantially augment SBI's capital adequacy ratio.
SBI Chief Financial Officer and Deputy Managing Director R K Saraf told PTI that the bank has met more than its target with this issue, as the board mandate was for a total Rs 9,500 crore fund raising in multiple tranches.

This round of fund-raising will increase the overall capital adequacy ratio of the bank to 12.81 per cent and the tier I capital adequacy ratio at over 9.67 per cent of assets, the bank said.

Media reports earlier in the day said had it not been for LIC, the issue would have struggled to go through as the nation's largest institutional investor had reportedly pumped in over Rs 3,000 crore into the issue.

When asked about this, Saraf said LIC has been one of the largest investors in the bank and that there is nothing unusual about it picking up higher stake in the bank through this issue.

Many public sector banks also participated in the share sale with over Rs 2,000 crore worth of bids, while foreign investor response was tepid, according to sources.
This was clear, as a source said, the issue was scheduled to be closed at 8 pm on Wednesday but was kept open at least till 2 pm today.

Saraf also said the bank has issued preferential shares worth Rs 2,000 crore to the government a day after the Centre infused Rs 2,000 crore into the bank as part of the annual recapitalisation of banks, which this fiscal stood at Rs 14,000 crore.
SBI disclosed did not investor details. Merchant bankers were not available for more comments.

In the past, SBI had hit the market with many equity issuances. In October 1996, it had sold a global repository receipts worth Rs 1,300 crore; in January 2008 it had hit the market with the largest-ever rights issue of Rs 16,700 crore.

In March 2012 the bank made a preferential allotment worth Rs 7,900 crore, which was followed by another preferential allotment of Rs 3,000 crore in March 2013 and yet another one on January 3 this year worth Rs 2,000 crore, according to Morgan Stanley data. All the preferential allotments were to the government.

Citigroup India, Deutsche India, DSP Merrill Lynch, HSBC India, JP Morgan India, SBI Caps and UBS Securities India were the book running lead managers to the issue, while J Sagar Associates acted as the legal advisor to the bank.