Mumbai: Punjab National Bank has raised Rs5,000 crore ($777 million) from a share sale to institutional investors, people with direct knowledge of the transaction said on Tuesday.

PNB, the second-biggest state-run bank in India, offered the new shares at Rs168 each in a deal aimed at boosting its capital ratio.

The sale had an initial offer size of Rs3,000 crore, but PNB fully exercised an option for a further Rs2,000 crore following strong demand. The share sale was subscribed to by about 50 local and foreign investors, one of the sources said.

Three quarters of the shares were allocated to local investors, with state-run Life Insurance Corp of India (LIC) bidding for a big chunk, the source added.

The sale comprises about 14% of the bank’s outstanding equity. PNB stock closed 0.4% higher in a Mumbai market that fell 0.8%.

India’s state-run banks are raising funds as part of a recapitalisation plan in which New Delhi will inject Rs1.35 trillion through recapitalisation bonds, while the lenders are required to raise on their own about Rs58,000 crore.

Bank of America Merrill Lynch , Credit Suisse , Goldman Sachs , HSBC , Kotak Mahindra Capital, Morgan Stanley and PNB Investment Services were managing the sale.

State Bank of India (SBI) earlier this year raised about Rs15,000 crore from a share sale to investors, while at least two other state-run lenders Union Bank of India and Bank of Maharashtra recently raised funds by selling shares.

Several other state-run banks are also preparing for share sales. Reuters