SBI plans major overseas fund-raising

State Bank of India (SBI), the country's largest commercial bank, is planning an ambitious fund-raising programme that includes a euro bond issue, a retail bond one and a rights issue.

''We are expecting to raise a benchmark-size euro bond,'' O P Bhatt, chairman, SBI, told the media in Mumbai today. ''We have a significant pipeline of existing customers who require euros.'' Benchmark-sized bonds are usually in excess of $500 million.

While Bhatt said the euro bond issue would have a five-year tenor, he did not divulge the size. But analysts estimate the issue to be in the range of euro 500 million and euro 750 million. The SBI chairman also did not disclose the rate, noting that ''we will try to raise it at the best possible level in the industry.''

SBI, which is planning a road show in Europe next week, has reportedly appointed Barclays Capital Plc, BNP Paribas SA, Credit Agricole SA, Deutsche Bank AG, Standard Chartered and UBS AG as lead managers to the issue.

Indian firms have raised a record $7.5 billion through offshore bond issues this year, but SBI's euro bond would be the first benchmark-sized offering in euros. The last big euro offer was of euro 500 mllion by ICICI Bank in March 2007. Two years earlier, SBI had come out with a euro 100 million issue.

Bhatt also revealed that the lender plans to come out with a retail bond issue every quarter. The bank's maiden, Rs.1,000 crore bond issue in October had elicited good investor response.

The bank has also sought the approval of the government – which has a 59 per cent stake in it – for a Rs.20,000 crore rights issue. Bhatt said he was expecting the government to clear the proposal soon.