SBI Said to Pick BofA, Deutsche Bank for $2 Billion OfferingBy and
India’s biggest lender seeks capital to bolster loan growth
IIFL, Kotak, JM Financial, SBI Capital also working on deal
State Bank of India, the country’s largest lender by assets, picked Bank of America Corp. and Deutsche Bank AG to arrange a share sale that could raise about $2 billion, people with knowledge of the matter said.
The lender also chose IIFL Holdings Ltd., Kotak Mahindra Bank Ltd., JM Financial Ltd. and SBI Capital Markets Ltd. to work on the offering, according to the people, who asked not to be identified because the information is private. SBI aims to start the share sale as soon as next month, the people said.
SBI, whose origins date back more than two centuries, is seeking capital to bolster loan growth after reporting fourth-quarter profit more than doubled. The offering comes as the Indian banking system battles a soured-debt ratio that’s surged to the highest level since at least 2001.
“There would be good demand for SBI’s share sale, as it is the best story among state-run banks in the country,” Hatim Broachwala, a Mumbai-based analyst at Nirmal Bang Institutional Equities, said by phone Friday. “Its strong network, loan and deposit franchise, quality of management and comfortable valuations make it the best-placed lender among government-controlled banks in India.”
Any deal would add to the $5.9 billion of new equity offerings in India over the past 12 months, according to data compiled by Bloomberg. The board of SBI in March approved fundraising of as much as 150 billion rupees ($2.3 billion) through methods including an institutional share sale, rights offering and depositary receipt sale.
SBI hasn’t finalized the exact timing and size of any offering, the people said. Representatives for SBI, IIFL and Kotak Mahindra Bank declined to comment, while representatives for Bank of America, Deutsche Bank and JM Financial didn’t immediately answer phone calls seeking comment.