SBI to Raise 1.80 Lakh Crores including FPO of Rs14500 Cr

In what may turn out to be the mother of all fund-raising, State Bank of India (SBI) is planning to mop up nearly Rs 1,80,000 crore over the next five years, including a Rs 14,500-crore IPO- the country’s biggest - later this fiscal.

While the government and the SBI management are still grappling with details, sources said the fund-raising would involve some new instruments - like issue of preference shares - and also require policy changes to facilitate steps like a rights issue, for which the government might shell out around Rs 10,000 crore.

While SBI needs funds to meet regulatory and expansion needs, for investors, the issue could be good news with fund managers saying the present share price of SBI was much below its intrinsic value. On Monday, SBI shares closed 0.4% higher on the BSE at Rs 1,613.

Despite being the largest bank, SBI has the second-highest market capitalisation of Rs 84,908 crore, compared to ICICI Bank’s Rs 92,884 crore. But on most parameters, SBI is a bigger player. It has 9,700 branches, compared to ICICI Bank’s 950.

SBI’s deposit base was Rs 4,50,000 crore, against ICICI Bank’s Rs 2,31,000 crore, while its advances were estimated at Rs 3,44,000 crore and its private sector rival had a credit base of Rs 1,98,000 crore at the end of June 2007, reports The Times of India.