Mumbai: Investment banks CLSA Ltd and Merrill Lynch & Co. are among six others set to arrange State Bank of India’s (SBI) $4.2 billion (Rs16,632 crore) share sale, three people familiar with the plan said.
Citigroup Inc., Deutsche Bank AG, Kotak Mahindra Capital Co. and SBI Capital Markets Ltd may also underwrite the rights offer by the Mumbai-based bank, India’s largest, the people said, declining to be identified before a formal announcement.
SBI’s closest rival, ICICI Bank Ltd, led a record year for share sales by Indian companies as lenders raised funds to meet accelerating credit demand in the world’s fastest-growing major economy after China. Merrill is the top-ranked advisor for a third year in India as companies sold $25 billion of stock.
“The share sale will be made easier with economic and banking sector growth still strong,” said R.K. Gupta, who manages the equivalent of $100 million of stocks at Credit Capital Asset Management Ltd in New Delhi.
SBI, 59.73% state-owned, plans to complete the share sale to existing investors by March 31. The appointment of investment banks will be announced after the government approves the plan, the people said. Officials at SBI and the arrangers declined to comment.
The bank’s $187 billion of assets are a fifth of those of China’s biggest, Industrial and Commercial Bank of China Ltd, and a 10th of Citigroup, the largest US bank. SBI is raising money as India prepares to permit overseas rivals to acquire private banks after a policy review in 2009.
SBI shares rose 0.31% to Rs2,265.20 on the Bombay Stock Exchange on Thursday. The stock has gained 85% this year, more than double the 39% advance in the benchmark Sensex index. The share sale will also catapult SBI past ICICI Bank as India’s most valuable, from its current market capitalization of $31 billion. ICICI is worth $32 billion.
The 200-year-old bank follows ICICI Bank, HDFC Bank Ltd and Axis Bank Ltd, who are among lenders that have together raised $8 billion selling shares this year to meet rising demand for credit. Bloomberg