State Bank of India, India’s largest bank, on Monday launched a qualified institutional placement of equity shares to raise between Rs 11,000-15,000 crore. “The floor price in respect of the issue, based on the pricing formula of SEBI, is Rs 287.58 per equity share of the bank and the relevant date for this purpose is June 5, 2017,” SBI said in a stock exchange filing. The Committee of Directors of the SBI will decide the pricing on June 8.
The bank said it may offer a discount of not more than 5 per cent to the floor price. The bank’s stock closed at Rs 287.35, down 0.02 per cent, on the BSE. In a stock exchange filing in March, SBI had indicated its intention to raise funds from the capital market. SBI’s share sale comes as banks face raising billions of dollars in new capital by March 2019 to meet global Basel III banking rules. Banks will also need more capital as they make higher provisions for bad loans as per the directive of the RBI.
In March, SBI’s board had approved a plan to raise up to Rs 15,000 crore ($2.33 billion) from capital markets during the current fiscal year. SBI last sold shares in January 2014 to raise $1.2 billion. The latest share sale will lead to an up to 6.7 per cent dilution of existing share capital and an up to 6.3 per cent of the post-issue capital, according to the term sheet of the issue. As on March 31, the Government of India held 62.22 per cent stake in the bank.
The government is planning to sell 3 per cent stake in IOC which could fetch about Rs 6,000 crore to the exchequer. The government currently holds 58.28 per cent stake in Indian Oil Corporation. As the market is witnessing a bull run, the Indian Oil Corporation is also likely to materialise in the next one or two months. The government had last sold 10 per cent stake in IOC at Rs 387 per share in August 2015 and raised Rs 9,369 crore.