SBI to Raise Up to Rs 25,000 Crore via QIP, Largest in Indian Banking History

Strategic Insights -

State Bank of India (SBI) is poised to raise up to Rs 25,000 crore via a qualified institutional placement (QIP), its first share sale in eight years, as the country's largest lender seeks to bolster its common equity tier 1 (CET-1) ratio from 11% at the end of March 2025. This would be the largest share sale through a QIP in Indian banking history, surpassing the bank's previous QIP in 2017. SBI's board had approved the QIP on May 3, and the bank is likely to hit the market in the next couple of months.

Key Takeaways:

  • SBI has finalized six banks to manage the fund raise: 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.
  • The QIP will be used to augment SBI's CET-1 ratio, currently the lowest among public sector banks, despite its robust growth with a return on equity (RoE) of 19%.
  • LIC, SBI's largest shareholder with a 9.38% stake, is likely to bid for a substantial size in the QIP, as it did in SBI's previous QIP.
  • SBI will also receive funds from the sale of its 13.19% stake in Yes Bank to Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) and its 5.19% stake in National Stock Exchange.

Statistics:

  • Rs 25,000 crore: The maximum amount SBI plans to raise through the QIP.
  • 11%: SBI's CET-1 ratio at the end of March 2025.
  • 9.38%: LIC's stake in SBI as of March 31.
  • 13.19%: SBI's stake in Yes Bank to be sold to Sumitomo Mitsui Banking Corporation (SMBC).
  • 5.19%: SBI's stake in National Stock Exchange.
  • 19%: SBI's return on equity (RoE).
  • 12%: Loan growth target.

Sources:

  • "SBI mulls Rs 25,000-crore QIP to shore up CET1 ratio". Times of India.
  • "SBI to raise up to Rs 25,000 crore via QIP, its largest ever share sale". Business Standard.