State Bank of India (SBI) on Monday announced the launch of the country’s largest ever qualified institutional placement (QIP) of Rs 15,000 crore at a floor price of Rs 287.58 per share. In a statement to the stock exchanges, the bank said it “may offer a discount of not more than 5% in the floor price in terms of regulation 85 of the Sebi (Securities and Exchange Board of India) ICDR regulations”.
Bloomberg reported on Monday that the Mumbai-based bank is offering as many as 544 million shares, citing terms of the deal obtained by it, adding that Bank of America, Deutsche Bank, IIFL Holdings, Kotak Mahindra Bank, JM Financial and SBI Capital Markets are the arrangers.
In January 2014, SBI had raised Rs 8,032 crore via a placement of shares. At the time, Life Insurance Corporation of India (LIC) had picked up a big chunk — around 41% — of the total shares sold. The shares were priced at Rs 151.76 per share and the bank had been hoping to raise Rs 9,600 crore.
The SBI stock closed at Rs 287.35 on Monday, ahead of the announcement. At this price, the stock — including subsidiaries — trades at 1.1 times price to adjusted book for 2017-18. On a standalone basis, the stock trades at 1.3 times. SBI shares had hit a 52-week high of Rs 315 in May this year after touching a 52-week low of Rs 197.10 in June 2016.
The merger of SBI and its five associate banks has resulted in a consolidated balance sheet of Rs 35 lakh crore, making it one of the top 50 banks in the world. At the end of March 2017, the size of SBI’s standalone balance sheet was Rs 27 lakh crore.
On a standalone basis, SBI’s FY17 net profit rose 5.36% to Rs 10,484 crore but net profit (after minority interest) of the SBI Group declined to Rs 241 crore in FY17, from `12,225 crore in the previous year. As at the end of the March quarter of FY17, SBI’s total capital adequacy ratio stood at 13.11%, of which tier I capital adequacy ratio was 10.35%
Earlier last month, private sector lender Kotak Mahindra Bank had raised Rs 5,803 crore through a QIP selling 6.2 crore shares at Rs 936 crore per share.
At an event in March, SBI chairman Arundhati Bhattacharya had observed that during the earlier QIP, merchant bankers had been optimistic initially. However, on the night before the issue was to close, she had been informed the book was about to fall off. “Early morning I got on to the phone and spoke to people. Somehow by the evening we had managed to stitch together at least 80% subscription and closed the issue,” Bhattacharya had said.