The stock market crash has spelt good news for some fresh investors. Investors looking to subscribe to the Rs 16, 736.31-crore rights issue of the country?s largest public sector bank ? the State Bank of India ? may have the last laugh.
On Tuesday, SBI?s stock closed at Rs 2,159.10 compared with Rs 2,462 on January 14. This means to buy the bank?s shares in the proposed rights issue, a new investor would have to shell out about 12.25% less. Analysts said going by the closing price of SBI?s stock on January 14, investors would have had to cough up at least Rs 12, 310 by February 4 to subscribe to a single SBI stock. However, in the present scenario, investors have to shell out only Rs 10,800 for one SBI stock.
To be eligible for a single share in the rights issue, investors need to buy at least five stocks on or before Feb 4, the cut off date fixed by the bank.
The SBI board has already cleared the proposal to raise capital through a rights issue in the ratio of 1:5. The rights issue was announced at a steep discount of more than 36% over January 14 closing price. SBI has pegged the rights issue at Rs 1,590 and for every five shares the shareholder will get the right to subscribe to one share.
The PSU bank would raise Rs 16,736.31 crore though the rights issue. The government would subscribe nearly Rs 10,000 crore to retain its shareholding of 59.73% in the country?s largest bank.
SBI has nearly 10,000 branches and is considering a proposal of merging its seven associates bank with itself. The bank, at present, controls nearly 25% of the banking business.