State Bank of India (SBI) on Tuesday invited proposals from merchant bankers with ‘experience and expertise’ in handling capital market issues to assist and advise it in its qualified institutional placement (QIP) or follow-on public offer (FPO) process.
In March, SBI had said its board approved a proposal that would allow the bank to raise equity capital of up to Rs 15,000 crore in FY18. “The bank intends to tap capital markets via a QIP/FPO. The issue size may vary based on various factors including but not limited to management discretion and the decision of the shareholders,” SBI said in a document.
The bank will select and appoint up to six merchant bankers who together will be designated as book running lead managers (BRLMs). SBI said that the bidders should have handled at least one domestic equity issue (initial public offering/further public offering/qualified institutional placement) of the size of Rs 2,500 crore or more in the BFSI (banking, financial service & insurance) space during the period from April 2014 to March 2017. While the last date of submitting queries is May 15, a pre-bid meeting will be held on May 16 and a presentation by bidders will be held on May 23.
In January 2014, SBI had raised Rs 8,032 crore with the Life Insurance Corporation of India (LIC) picking up a big chunk of 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 on the BSE closed at `296 on Tuesday. At this price, the stock trades at 1.31 times of its standalone book value as on Q3 FY17.
Once the merger with the associate banks is complete, SBI’s consolidated balance sheet would be approximately `35 lakh crore, making it one of the top 50 banks in the world. At the end of December, SBI’s stand-alone balance sheet was Rs 25.8 lakh crore.
As in the December quarter of FY17, SBI’s total capital adequacy ratio stood at 13.73%, of which Tier I capital adequacy ratio was 9.97%.