State Bank of India mulls two-stage equity offer
25 Jun 2007
New
Delhi: The government of India, majority owner of
the State Bank of India (SBI), is mulling a change in
strategy for sale of its shares in the equity markets.
It may, instead, ask the largest banking group in the country to, go in for a two-stage sale that would see it initially offer a combination of rights issue and preference shares in the first stage and then diluting its stake through a sale of shares in the domestic and international markets.
The rights / preference share issue would actually result in the stake holding of the government rising in the short term, before its eventual dilution through a sale in the open markets.
The
move is being considered post-ICICI Bank''s "successful"
follow-on public issue in the markets last week. What
would have set the government thinking would have been
the extremely lukewarm response that the offer received
from the retail segment.
The government currently holds a 59.73-per cent stake in SBI, which will be formally transferred to it on 29 June, by the Reserve Bank of India.
An amendment to the Act that governs SBI is likely to be cleared by Parliament during the monsoon session, allowing for a reduction in the government''s stake to 51%. The amendment will also clear the way for a sale of preference shares.