New Delhi: The SBI rights issue for raising over Rs 16,000 crore, is likely to open on 16-18 February, according to finance ministry sources. The issue will invite subscription for a period of one month.
The government will subscribe to its over 59% shares on the last day of the issue, the sources said.
When asked whether the current volatility in the stock exchanges would affect the pricing of the issue, the sources said that the fluctuation would not have any impact on the offer announced by the bank.
Earlier last month, SBI had priced its rights share at Rs 1,590 per share (face value Rs 10 each). Even after decline in its price in the recent days, SBI share was ruling at over 25% premium over the rights issue price. The scrip was ruling at Rs2,131.90 in the afternoon trade on BSE on Friday, down 1.08% from Thursday’s close of Rs2,155.20.
Under the issue, existing shareholders would get one for every five shares they hold.
The bank will raise Rs16,736.31 crore by way of the rights issue, which will be made to the government and other existing shareholders, including GDR holders. It will also issue shares to employees under employees stock purchase scheme.
SBI will increase the issued capital from Rs526.30 crore to Rs650.00 crore.
Clearing the SBI’s rights issue, the Union Cabinet had earlier decided to contribute around Rs10,000 crore for its 59.73% stake, but this would not come in cash. Instead, the government will issue SBI an equivalent sum of bonds. Under the plan, SBI will eventually be able to redeem the bonds for Rs10,000 crore at the end of yet-to-be-defined tenure.
“We get the shares, and pay for it later,” P Chidambaram, Finance Minister had said earlier.
The impact is fiscally neutral in the current year. The maturity and term are to be decided later, he had added.
Once the bonds are issued, the government will pay an interest on them, which amounts to Rs790 crore a year. This payment, Chidambaram had said, will be more than offset by taxes and dividends that SBI will pay the government.
Accruals to the government are projected at Rs4,800 crore over the next three years. After 2010-11, the government estimates that SBI give it at least Rs1,892 crore a year in dividend and taxes.