State Bank of India launches up to $1.5 billion share sale - sources

Tue Jan 28, 2014 9:26pm IST

People walk in front of a signboard displayed at the head office of State Bank of India in Mumbai November 9, 2009. REUTERS/Arko Datta/Files

People walk in front of a signboard displayed at the head office of State Bank of India in Mumbai November 9, 2009.

Credit: Reuters/Arko Datta/Files

Related Topics

Stocks

   
Kishore Pandey, 82, lies on a bed as his daughter, Usha Tiwari, holds him and a priest stands by them (L) at Mukti Bhavan (Salvation House) in Varanasi, in the northern Indian state of Uttar Pradesh, June 19, 2014. REUTERS/Danish Siddiqui

Waiting to die at Salvation House

The city of Varanasi is Hinduism's holiest city and many Hindus believe that dying there and having their remains scattered in the Ganges allows their soul to escape a cycle of death and rebirth.  Slideshow 

REUTERS - State Bank of India launched a share sale on Tuesday to raise up to $1.5 billion, said three sources directly involved in the deal, in the country's biggest equity offering in almost a year.

India's largest lender, which accounts for a quarter of the country's loans and deposits, will use the proceeds to boost its domestic and overseas banking operations, said the sources.

The sources declined to be named as details of the deal have not been made public yet. SBI Chairwoman Arundhati Bhattacharya did not immediately respond to calls seeking comment.

Indian state banks, such as SBI, with their high exposure to the power and infrastructure sectors, have seen a sharp surge in bad loans in a slowing economy, forcing them to look for additional sources of capital to strengthen their balance sheets.

A strong response to the SBI offering, which is the largest equity sale by an Indian company since $2.2-billion power utility NTPC Ltd's (NTPC.NS) issue in Feb 2013, could help other state banks tap the equity market.

"The macroeconomic concerns will cloud the earnings outlook of banks, mainly those from the public sector, in the near term, but the growth outlook is pretty strong in the medium to long term," said a banker directly involved in the SBI offering.

"Most of the bank stocks have been badly beaten down in the last few months and if you give good discount on top of that, it will definitely see interest," he said. "The banks will have to come to the market, they can't put it off for a long time."

SBI is selling shares to institutional investors in a range of 1,565-1,596 rupees a share, said the sources, a discount of up to 2 percent on Tuesday's closing price of 1,596.30 rupees.

The stock lost more than a quarter of its value in 2013 and is down nearly 10 percent this year.

A large number of companies, including state banks, have delayed their plans to raise funds by selling shares due to poor investor sentiment due to an economic slowdown and sluggish earnings growth.

The Sensex is down more than 2 percent this year.

The deal will close early on Wednesday, the sources said.

Citigroup (C.N), HSBC (HSBA.L), JPMorgan (JPM.N), Bank of America Merrill Lynch (BAC.N), Deutsche Bank (DBKGn.DE), UBS AG (UBSN.VX) and SBI Capital, the investment banking unit of State Bank of India, are the managers.

(Reporting by Sumeet Chatterjee; Editing by Louise Heavens)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

GM Recall

GM Recall

GM recalls 717,950 vehicles in U.S., not for ignition switches  Full Article 

Hyundai Motor Results

Hyundai Motor Results

Hyundai Motor Q2 profit slips as firmer won, U.S. discounts hurt  Full Article 

Nokia Results

Nokia Results

Nokia raises networks outlook after Q2 profit beats estimates  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Breakingviews

Breakingviews

Apple winds up earnings hope for new gadgets  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage