SBI mandates 9 arrangers for raising Rs 12,000 cr

State Bank of India (SBI), the country's largest lender by assets, is likely to raise close to Rs 12,000 crore of capital by issuing fresh shares to investors.

The public sector bank appointed nine arrangers for the issue. Sectoral sources claimed Bank of America will be the "international marketing coordinator" for the share sale programme along with Citigroup, Goldman Sachs and Barclays. ICICI Securities, Axis Bank, JM Financial, Kotak Mahindra Bank and SBI Capital Markets will also manage the transaction.

While the state-run lender is yet to receive the necessary approvals for this fund-raising programme nor decided on whether it will be a public issue or private placement, bankers appear confident that the share sale will be concluded before the end of the financial year if there is no sharp deterioration in the macro economic environment and investors' sentiments.

"SBI needs capital for its growth and the government is willing to dilute its stake in the bank. The transaction is expected to be completed in the next couple of months," said a banker, requesting anonymity. The government currently holds 58.6 per cent stake in SBI. The Cabinet had recently approved the proposal to cut the government's stake in public sector banks to 52 per cent.

The proposed fund-raising programme will be in addition to the government's decision to infuse around Rs 3,000 crore of capital in SBI.

The Rs 15,000-crore capital infusion will boost its capital adequacy ratio which was 12.33 per cent at the end of September. Apart from supporting business growth, banks will need capital for stressed asset provisioning, with the banking regulator withdrawing forbearance given to banks for debt recast. From April 1, banks have to make higher provisions for standard restructured advances - that is in line with non-performing asset provisioning which is 15-20 per cent - as compared to five per cent now. Bankers said SBI is yet to decide on the way it will raise money from the market. "The mode is not finalised. It could be a follow-on public offer (FPO) or a qualified institutional placement (QIP)," said a banker. Rights issue, private placement of shares, GDR (global depository receipt) and ADR (American depository receipt) would also be considered.

SBI will hold a general meeting of its shareholders on February 26, seeking their approval to raise up to Rs 15,000 crore through sale of shares. The bank will announce its third quarter earnings on Friday.

Earlier this month, HDFC Bank, the second-largest private sector lender raised around Rs 10,000 crore through a combination of ADR and QIP. The bank raised close to Rs 8,000 crore by issuing ADRs to global investors, while it sold India-listed shares worth Rs 2,000 crore to qualified institutional bidders.