State Bank of India said it raised Rs 15,000 cr by selling its shares in a ‘qualified institutional placement’ or QIP, making it the largest such transaction in Indian share market history.
QIP’s usually involve selling shares exclusively to big institutions such as mutual funds, banks and other investment houses and are cheaper and quicker than other competing methods such as follow-on offers.
The QIP was launched on 5th June 2017.
SBI said the book was oversubscribed and demand exceeded Rs 27,000 cr.
“Exceptionally strong demand came from long only FIIs of over Rs 8000cr,” it added.
Overall FII demand was in excess of Rs 11000cr.
“The issue also saw very strong demand from DIIs, amounting to Rs 8500cr, excluding one large DII,” it said, possibly referring to the LIC.
Given the overwhelming response, the issue was priced at the top end at Rs 287.25/ share, SBI added.
26% of the issue has been taken up by long-only foreign investors, 25% by DIIs (excluding one large DII), and 11% by high quality FII hedge funds.
Long-only refers to funds that buy and keep shares for the longer term, instead of using the shares for trading in the short term.
The QIP will result in the issue of approximately 52.21cr new shares at Rs. 287.25, which will lead to a dilution of 6.05%.
Post the issue, the shareholding of the government of India will fall to 57.07%.
Post issue CRAR for the merged entity will be at 13.64%.
“The overwhelming response to the QIP from a diverse cross section of investors highlights the faith reposed in SBI by both domestic and foreign institutional investors. The QIP allocation further enhances the diversity of the shareholder base which will add value to the Bank,” it said.
SBI has recently completed a merger involving half a dozen of its associate banks, increasing its size even more.
“Post the merger with erstwhile associate banks, which coincides with the improving economic environment in India, we believe that the Bank is once again at an inflection point where the positive bias will be significant. We expect to leverage the synergies offered by the merger, while continuing to focus on issues such as corporate credit growth and asset quality, thus leading to improvement in return on equity over the long term,” it said.