SBI QIP: A hit without being underpriced

Whether government-owned banks would garner enough interest in the secondary market has been a recent talking point in the investor community. State Bank of India (SBI), this country's largest, was among the first to announce a plan this year to raise funds — Rs 15,000 crore — through Qualified Institutional Placement (QIP). Pricing is an important aspect for all capital raising. Many QIPs get placed only at a discount to the market price. When bank chief Arundhati Bhattacharya was asked if the money could be raised without compromising on valuation, she confidently said the bank would not take more than a five per cent discount to its market price. Future & Option Trading Tips

 Much to even the chairman’s surprise, reports suggest SBI launched its QIP at Rs 287.25, also the closing price of its stock on Monday. It is the largest secondary market issuance so far by any bank. A QIP issue at the market price suggests good demand. Sources in the know say it was subscribed about 1.7 times, garnering Rs 26,000 crore. Of this, around Rs 11,000 is said to be from domestic institutional investors (DIIs). The rest was from foreign institutional investors (FIIs). “Some of the top FIIs such as Franklin Templeton, Temasek and a Canadian pension fund have shown strong interest. Among domestic institutions, the issue was well received by large insurance companies such as ICICI Prudential, HDFC Life and GIC Re,” according to sources. Financial Astrology Tips