SBI eyes Rs 25,000 crore via QIP, kicks off hunt for investment advisors

Although there were earlier reports of SBI considering a Rs 15,000–18,000 crore QIP in FY20 following the FY18 offering, that fundraising effort did not materialise

India’s biggest lender, the State Bank of India, has reached out to investment banks, inviting them to submit proposals to assist in raising Rs 25,000 crore through a qualified institutional placement (QIP), The Mint Report said on Monday.

“The investment banks are scheduled to present their proposals this week,” said one of the sources cited by The Mint.

This move follows the approval granted by SBI’s board on 3 May for the fundraising—marking the bank’s second QIP since FY18, when it had raised Rs 18,000 crore. A QIP is often seen as a faster alternative to rights issues or follow-on public offerings, enabling publicly listed firms to raise capital by offering shares or convertible instruments to institutional investors.

On Friday, SBI shares ended the trading day with a 1.29% gain at Rs 795.25, tracking the broader Nifty index, which closed at 25,112.40. The lender’s market capitalisation reached Rs 7.09 trillion, making it the most valuable state-owned enterprise by market value.

So far, SBI has not issued a statement regarding the development.

On 20 May, the bank issued a request for proposals to onboard up to six merchant bankers and other intermediaries to oversee the capital raise. Those selected will be appointed as book-running lead managers, working alongside SBI Capital Markets Ltd., a subsidiary of the bank.

Although there were earlier reports of SBI considering a Rs 15,000–18,000 crore QIP in FY20 following the FY18 offering, that fundraising effort did not materialise. However, this time, the initiative appears more concrete, the report added.

“The bank seems more committed now. With the domestic capital markets showing strong depth, they are aiming to tap into that demand. Rs 25,000 crore is a significant number, but institutional appetite is likely to support it,” the second source told The Mint.

In addition to SBI, several other public sector banks—including Bank of Maharashtra, Central Bank of India, Uco Bank, Indian Overseas Bank, and Punjab & Sind Bank—are also pursuing QIPs, according to a 2 April report by Mint. Notably, 2024 has already seen record QIP fundraising across sectors, with 99 deals amounting to Rs 1.41 lakh crore.

Despite this fundraising activity, SBI has maintained that it doesn’t have an immediate requirement for growth capital. With a capital adequacy ratio (CAR) of 14.25% as of 31 March, the bank estimates it has the capacity to lend up to Rs 8 trillion.

SBI Chairman CS Setty, during an analyst interaction on 3 May, clarified that the bank routinely passes an enabling resolution each year to support potential capital-raising needs, particularly to strengthen its common equity tier-1 (CET-1) capital.

“At this point, we don’t have an urgent need for capital from a CAR perspective for loan growth. Still, we believe that if a favorable opportunity arises to raise equity, we’ll certainly consider it,” Setty said, noting that the bank is watching for the “right value” and has not yet finalized the timing.

SBI’s CAR of 14.25% at the end of March was three basis points lower year-on-year but marked a 122 bps improvement over the previous quarter. Although it surpasses the regulatory minimum of 12.1%, SBI still trails behind some of its private sector counterparts—HDFC Bank, for example, reported a robust 19.6% CAR.