SBI raises Rs 8k cr through QIP

Capital adequacy improves to 12.8%

State Bank of India, the country’s largest lender, on Thursday said it had raised Rs 8,032 crore by way of qualified institutional placement (QIP), which would boost its capital adequacy ratio to 12.81 per cent as compared to 12.09 per cent recorded as on September 30, 2013. The Tier-I capital of the bank will improve to 9.67 per cent, from 9.13 per cent, it added.

According to a SBI official, with the QIP proceeds, the bank will not require any equity infusion for the next two years. The bank also has “plenty” of room to raise funds via Tier-II bonds and hybrid capital, the official said.

Earlier this year, the government had infused Rs 2,000 crore in the bank through preferential allotment. Following the QIP, the government stake in the bank will come down to 58.6 per cent, as compared to 62.9 per cent earlier.

The government had said it would infuse capital in public sector banks to ensure Tier-I capital adequacy of eight per cent — higher than the regulatory norm of six per cent. Banks are mandated to have overall capital adequacy ratio of nine per cent.

“The QIP saw participation from a wide range of domestic and international investors... After the conclusion of the QIP offering, the bank will meet its target of capital raising for the current year.  The fresh inflow will substantially augment our capital adequacy ratio,” said bank chairperson Arundhati Bhattacharya.

According to SBI, this was the largest QIP equity issuance to date in India.

While the bank took board’s approval to raise Rs 9,500 crore in one or more tranches, but as the emerging markets were nervous ahead of the US Fed’s tapering announcement, which resulted in some of the investors adopting a wait-and-watch policy. The US Fed has started to prune its asset purchase programme — known as quantitative easing — by $10 billion every month.

According to officials, SBI’s issue was subscribed by both private and public sector banks and insurers, apart from some foreign institutional investors. Domestic institutions like Life Insurance Corporation of India had subscribed to a sizeable chunk of the share sale, market participants said.

Citigroup Global Markets, Deutsche Equities, DSP Merrill Lynch, HSBC Securities and Capital Markets, JPMorgan India, SBI Capital Markets and UBS Securities India were the arrangers to the QIP, SBI said.