State Bank of India, the public sector banking giant, has priced its rights issue at a 35% discount to its closing price on Friday.The bank, 59.73% government-owned, will raise Rs 16,736 crore by offering one share for every five held at Rs 1,590 apiece, a discount to its Rs 2,437.25 stock price on January 11. The cut-off date for the issue is February 4.
The discount should act as an extra incentive for investors of the bank which has seen its stock price soar 101% in the last one year — from Rs 1,222 to Rs 2,462 currently. The stock closed at Rs 2,462.25 on Monday.
Sources said the bank plans to sell over 10 crore shares, of which 86 lakh will be reserved for employees holding shares of the bank, the first such instance among public sector banks.
Officials said the price of the issue was arrived at using the one-year average, which came to Rs 1,533 per share.
The bank’s capital will grow to Rs 650 crore from the existing Rs 526.30 crore.Analysts said a lower discount could possibly allow the bank to raise more money, but the discount will ensure that the issue will “cruise through”.
Read more in The DNA Money article.
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