(Adds share sale details, comments, context)
Jan 28 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
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
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)