Money & Banking

SBI's QIP oversubscribed, demand tops Rs 27,000 cr

Our Bureau Mumbai | Updated on January 12, 2018 Published on June 09, 2017

SBI Chairman Arundhati Bhattacharya with B. Sriram, MD, Corporate Banking Group, at a press conference in Mumbai on Friday. -- Paul Noronha

FII demand in excess of Rs 11,000 cr

State Bank of India on Friday said its qualified institutional placement offer for raising Rs 15,000 crore was oversubscribed, with demand exceeding Rs 27,000 crore and the issue getting priced at Rs 287.25 per share.

India’s largest bank, in a statement, said exceptionally strong demand of over Rs 8,000 crore came from long only foreign institutional investors. Overall, FII demand was in excess of Rs 11,000 crore.

The issue also saw very strong demand amounting to Rs 8,500 crore from domestic institutional investors.

The QIP will result in the the issue of approximately 52.21 crore new shares (at the rate of Rs 287.25 apiece), which will lead to a dilution of 6.05 per cent. Post the dilution, government’s stake in the bank will be at 57.07 per cent.

Post-issue, the capital to risk weighted assets of the bank will be at 13.64 per cent and CET 1 at 10.20 per cent.

“We have successfully concluded India’s largest ever QIP. We launched it on June 5 and closed it on June 8. So, with that we have concluded what I think is the largest fresh equity issuance out of India. It is also the third largest equity offering in 2017 in the entire APAC region,” said SBI Chairman Arundhati Bhattacharya.

She added that the QIP issuance has come on the back of a 43 per cent stock rally in the last one year.

To a specific question on how long the resources raised via QIP will last, Bhattacharya said, "As per the plan that we have put in place, we are quiet comfortable till next year. In fact, even without this equity raise, with the kind of earnings that we were expecting we would have still met the regulatory requirements up to FY19, including Basel III requirements. This is over and above that.”

Plus, the bank also has plans for unlocking value by listing at least the life insurance subsidiary. “So, to that extent there will be some more (resources) that we will get through our non-core (asset) divestments. And that will add on to this (QIP resources), explained the SBI chief.

Bhattacharya emphasised that “we raised capital mainly in order to support growth because we very much believe that growth is around the corner.”

In FY18, the bank has estimated growth (in business) of 10-12 per cent and in FY19 it is pegged at 14 per cent.

"Other than life, we have a number of other (non-core) investments such as CCIL, NSE (if it comes up for listing), and UTIMF…. We are not looking at exiting from NSE completely but definitely I think we will pick up some amount (via its listing),” said Bhattacharya.

Anshula Kant, DMD & CFO, observed that for FY18 the bank has not fixed the resources that will be raised via divestment of non-core assets. Last year, the bank’s resource raising target via divestment of non-core assets was Rs 3,000 crore and it raised Rs 2,700 crore.

Published on June 09, 2017
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