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LIC picks up major portion of SBI offer

Life Insurance Corporation of India bought shares worth around Rs 3,000 crore in State Bank of India’s qualified institutional placement (QIP) offering. This is quite a big chunk of the shares and virtually a face saver for the bank. Many public sector banks also picked up shares while response from foreign investors was not very encouraging. Through the biggest QIP ever, SBI is expected to raise Rs 9,230-9,410 crore. LIC picked up about one-third of the issue. The issue was priced at its lower band at Rs 1565 a share, at a marginal discount to the share’s prevailing price. Shares of the bank closed at Rs.1573.65, down 1.4%. The offer, with UBS AG being the book running lead manager, closed on Wednesday, with a lukewarm response from investors, said bankers tracking the issue. The floor price for the sale, determined by Securities and Exchange Board of India was Rs1629.35 per share. A company can offer shares to its QIP investors at a maximum 5% discount to the Sebi-formulated floor price. Even after the QIP, the government will still continue to hold at least a 58% stake in the bank as that was the pre-condition set by the SBI board before giving its nod.

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