LIC buys SBI stake worth Rs 5,700 crore in QIP issue

Life Insurance Corporation (LIC), India’s largest insurance company, has acquired shares worth Rs 5,700 crore in State Bank of India’s Rs 15,000 crore qualified institutional placement (QIP).

LIC got 77 per cent of the shares that it applied in the QIP issue. “We did not give LIC the full sum they asked for but 77 per cent of what they asked, which is 38 percent of the total QIP,” SBI chairman Arundhati Bhattacharya said.

Bhattacharya said demand from foreign institutional investors was in excess of Rs 11,000 crore, while domestic institutional investors (excluding LIC) had put in bids worth Rs 8,500 crore. LIC had placed orders for 50 per cent of the total issue size. LIC’s stake after this investment would be 10.4 per cent, up from 8.6 per cent.

The bank raised Rs 15,000 crore through qualified institutional placement (QIP). It issued around 52.21 crore new shares at a price of Rs 287.25. “As per the plan we have put in place, we are quite comfortable on the capital front till next year. We will not require government funds (in FY18). At this point we have not asked for capital (from the government). Even without this capital raising, we can meet all the regulatory capital requirements up to 2019, including Basel III need. This is over and above that,” Bhattacharya said.

SBI Chairman said in the current fiscal the bank will be focusing on listing its life insurance arm. “We have plans of unlocking value by listing at least the life insurance subsidiary. So there will be some more (capital) that we (will) get through our non-core divestments,” she said. It may also consider some stake sale in its non-core assets including CCIL, NSE and UTI MF.

The lender issued 52.2 crore equity shares at a price of Rs 287.25 per share, it said in a stock exchange filing. SBI had originally planned to sell 54.4 crore shares in a Rs 275.76-287.25 per share price band.

The bank expects a credit growth of 10-12 per cent in the current fiscal and 14 per cent in fiscal 2018-19. The bank’s CRAR (for the merged entity) is at 13.64 per cent and CET 1 at 10.20 per cent.

------- By: ENS Economic Bureau | Mumbai