UPDATE 1-State Bank of India launches up to $1.5 bln share sale-sources
(Adds share sale details, comments, context)
Jan 28 (Reuters) - State Bank of India launched a share sale on Tuesday to raise up to $1.5 billion, said three sources directly involved in the deal, in the country's biggest equity offering in almost a year.
India's largest lender, which accounts for a quarter of the country's loans and deposits, will use the proceeds to boost its domestic and overseas banking operations, said the sources.
The sources declined to be named as details of the deal have not been made public yet. SBI Chairwoman Arundhati Bhattacharya did not immediately respond to calls seeking comment.
Indian state banks, such as SBI, with their high exposure to the power and infrastructure sectors, have seen a sharp surge in bad loans in a slowing economy, forcing them to look for additional sources of capital to strengthen their balance sheets.
A strong response to the SBI offering, which is the largest equity sale by an Indian company since $2.2-billion power utility NTPC Ltd's issue in Feb 2013, could help other state banks tap the equity market.
"The macroeconomic concerns will cloud the earnings outlook of banks, mainly those from the public sector, in the near term, but the growth outlook is pretty strong in the medium to long term," said a banker directly involved in the SBI offering.
"Most of the bank stocks have been badly beaten down in the last few months and if you give good discount on top of that, it will definitely see interest," he said. "The banks will have to come to the market, they can't put it off for a long time."
SBI is selling shares to institutional investors in a range of 1,565-1,596 rupees a share, said the sources, a discount of up to 2 percent on Tuesday's closing price of 1,596.30 rupees.
The stock lost more than a quarter of its value in 2013 and is down nearly 10 percent this year.
A large number of Indian companies, including state banks, have delayed their plans to raise funds by selling shares due to poor investor sentiment due to an economic slowdown and sluggish earnings growth.
India's main stock market index is down more than 2 percent this year.
The deal will close early on Wednesday, the sources said.
Citigroup, HSBC, JPMorgan, Bank of America Merrill Lynch, Deutsche Bank, UBS AG and SBI Capital, the investment banking unit of State Bank of India, are the managers. (Reporting by Sumeet Chatterjee; Editing by Louise Heavens)
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