The country’s biggest lender State Bank of India (SBI) has raised Rs 25,000 crore through qualified institutional placement (QIP) route. The issue is the biggest share sale to institutional investors in the country’s capital market. The fund raised will boost the bank’s common equity tier 1 (CET1) capital ratio – the core equity capital, which indicates a bank’s financial strength. It will enable the bank to further extend credit to various key sectors such as retail and corporate.
QIP is one of the capital raising instruments used by listed companies to garner funds by issuing equity shares to qualified institutional buyers (QIBs), including venture capital funds, pension funds and mutual funds.
Through a QIP, a listed issuer issues eligible securities to QIBs on a private placement basis. It also includes an offer for sale of specified securities by the promoters and/or promoter group on a private placement basis. QIBs are sophisticated investors and possess the expertise and resources to take an informed investment decision independently. These investors are generally well-versed with the issuer’s business operations, financials and industry positions.
How much capital has SBI raised through its QIP?
In May this year, the bank had received board approval to raise equity capital aggregating up to Rs 25,000 crore in one or more tranches during FY26 through QIP/ follow-on public offer (FPO) or any other permitted mode. The lender, which opened its QIP for subscription on July 16, managed to raise Rs 25,000 crore in one tranche.
This QIP was the biggest issue in the domestic capital markets, surpassing Coal India’s Rs 22,560 crore QIP launched in 2015. It was also for the first time since 2017 that SBI mobilised funds through equity sale. The bank had raised Rs 15,000 crore in June 2017.
What was the floor price of the QIP?
The SBI QIP floor price had been set at Rs 811.05 per equity share, a 2.5 per cent discount over the July 16 (when the issue was launched) closing price of the bank’s share price at Rs 831.55 apiece.
The bank on Monday (July 21) said the shares in the QIP were priced at a premium to floor price of Rs 811.05 per share.
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The floor price of the securities is determined based on Sebi regulations. It is calculated as the average of the closing prices of a company’s shares over the preceding two weeks from a relevant date.
How did investors respond to SBI’s QIP?
SBI said the QIP received robust demand and was oversubscribed 4.5 times, reflecting strong investor confidence in its strategy and the outlook for the country’s banking sector.
Foreign investors accounted for 64.3 per cent of total demand, underscoring the attractiveness of the country’s growth story. Marquee long-term investors received nearly 88 per cent of the final allocation, including 24 per cent of the issue size placed with foreign long-term investors.
How will the fund raise benefit SBI?
The capital raised through the QIP will augment SBI’s core equity capital – common equity tier 1 (CET1) capital ratio to 11.5 per cent from 10.81 per cent as on March 31, 2025.
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Capital equity tier 1 is defined as a bank’s core equity capital as a percentage of risk-weighted assets. It shows a bank’s solvency or its ability to absorb losses immediately. It is an indicator of a bank’s financial strength. Improvement in CET 1 ratio shows accretion of high-quality capital by banks.
The bank said the funds mobilised through the QIP will support a calibrated credit growth across retail, micro, small & medium enterprises (MSME) and corporate segments.
