SBI plans to hire merchant banker for sale of non-core assets

Moneycontrol News

The State Bank of India (SBI) is looking to hire merchant bankers for the sale of its non-core investments to try and boost its capital base, according to a source-based report by the Mint.

SBI has investments in stock exchanges, depositories, clearing and warehousing corporations, and credit rating agencies.

“Once a merchant banker is on board, we will look at which assets we can monetize, whether fully or partially. Since these are not fire sales, we want to have some kind of a timetable. From November, we should be able to go to the market,” sources told Mint.

Earlier, SBI raised Rs 15,000 crore in June via Qualified Institutional Placement (QIP). This process helped improve the bank's capital adequacy ratio to 13.31 percent from the previous 12.85 percent. The ratio is the bank’s capital in proportion to its loans, accounting for risk.

SBI executives had earlier said that monetisation of non-core assets can help in raising capital. A SBI spokesperson mentioned that SBI will exit, either wholly or partially, its investments in “non-core assets.”

SBI is also trying to improve capital adequacy ratio by divesting 8 percent stake in joint venture SBI Life Insurance's initial public offering (IPO). The IPO opened for subscription on Wednesday.

Also read: SBI Life IPO – Get insured for life by paying the premium

SBI is seeking bids from merchant bankers who will help them identify interested parties to buy stakes in the strategic investments, a tender on their website stated. The names of the assets were not mentioned in the tender.

“Since SBI has already done QIP and it may not go for another round of fundraising this year which may dilute government’s stake. Hence, sale of non-core assets is a viable option,” experts told Mint.