State Bank of India (SBI) shares will be in focus on Thursday after the country’s largest lender moved closer to raising up to Rs 25,000 crore via a qualified institutional placement (QIP) — its first such equity sale in eight years.
The capital raise is aimed at bolstering its Common Equity Tier-1 (CET-1) ratio, which stood at 11% as of March 2025 — among the lowest for public sector banks.
Kotak Mahindra Capital Co, ICICI Securities Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, Citigroup Global Markets India Pvt Ltd, Morgan Stanley India Co Pvt Ltd and SBI Capital Markets Ltd are among banks that have been finalised to manage the fundraising, people familiar with the information said.
“The banks have agreed to charge just Rs 1 for this transaction, as it is a matter of league table win rather than fees. It is a prestige battle for banks to be on the mandate to raise money for the largest bank in India, which is a rare occasion,” said one of the persons cited above.
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The last time banks charged a similar fee for a large transaction was SBI’s last QIP in 2017. SBI had then raised Rs 15,000 crore by selling 522 million shares through the QIP in June 2017. "This is a prestigious mandate, so bidding was aggressive. One of the merchant bank's quoted a Rs 1 fee and everyone else had to come to that level," said this person cited above.
The bank’s board had approved the QIP on May 3. If the bank raises Rs 25,000 crore, it will be the largest share sale through a QIP in India. A QIP is a faster alternative to a rights issue or follow-on public offerings such money is raised in bulk from large institutional investors.
“The bank wants to augment its CET 1 ratio which is the lowest among public sector banks. Growth wise the bank is well placed with the RoE of 19% is much ahead of the 12% loan growth. But capital can now be raised to cushion the CET which is the plan,” said one of the people.
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The bank is likely to hit the market in the next couple of months. As in the previous QIP when Life Insurance Corporation bid for half the size, this time too, the insurance company is likely to bid for a substantial portion of the equity. LIC has a 9.38 percent stake in the bank as of March 31, and is the largest shareholder in the bank after the central government that owns 57.43 percent.
A final call on the timing and the size will be decided by the bank based on the market conditions. SBI shares ended at Rs 800 a piece on the BSE up 1% from Tuesday's close.
This fiscal SBI will also receive money from the sale of a 13.19% stake in Yes Bank to Japanese lender Sumitomo Mitsui Banking Corporation (SMBC). It also holds a 5.19% in National Stock Exchange which will yield it a substantial sum whenever the stock exchange lists.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
The capital raise is aimed at bolstering its Common Equity Tier-1 (CET-1) ratio, which stood at 11% as of March 2025 — among the lowest for public sector banks.
Kotak Mahindra Capital Co, ICICI Securities Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, Citigroup Global Markets India Pvt Ltd, Morgan Stanley India Co Pvt Ltd and SBI Capital Markets Ltd are among banks that have been finalised to manage the fundraising, people familiar with the information said.
“The banks have agreed to charge just Rs 1 for this transaction, as it is a matter of league table win rather than fees. It is a prestige battle for banks to be on the mandate to raise money for the largest bank in India, which is a rare occasion,” said one of the persons cited above.
Also Read: HDB Financial Services IPO: Should you subscribe? Here's what brokerages say
The last time banks charged a similar fee for a large transaction was SBI’s last QIP in 2017. SBI had then raised Rs 15,000 crore by selling 522 million shares through the QIP in June 2017. "This is a prestigious mandate, so bidding was aggressive. One of the merchant bank's quoted a Rs 1 fee and everyone else had to come to that level," said this person cited above.
The bank’s board had approved the QIP on May 3. If the bank raises Rs 25,000 crore, it will be the largest share sale through a QIP in India. A QIP is a faster alternative to a rights issue or follow-on public offerings such money is raised in bulk from large institutional investors.
“The bank wants to augment its CET 1 ratio which is the lowest among public sector banks. Growth wise the bank is well placed with the RoE of 19% is much ahead of the 12% loan growth. But capital can now be raised to cushion the CET which is the plan,” said one of the people.
Also Read: These 10 multibagger penny stocks surged 200-570% in last 1 year. Do you own any?
The bank is likely to hit the market in the next couple of months. As in the previous QIP when Life Insurance Corporation bid for half the size, this time too, the insurance company is likely to bid for a substantial portion of the equity. LIC has a 9.38 percent stake in the bank as of March 31, and is the largest shareholder in the bank after the central government that owns 57.43 percent.
A final call on the timing and the size will be decided by the bank based on the market conditions. SBI shares ended at Rs 800 a piece on the BSE up 1% from Tuesday's close.
This fiscal SBI will also receive money from the sale of a 13.19% stake in Yes Bank to Japanese lender Sumitomo Mitsui Banking Corporation (SMBC). It also holds a 5.19% in National Stock Exchange which will yield it a substantial sum whenever the stock exchange lists.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
