India’s largest lender State Bank of India (SBI) has announced the sale of 3.89% of its holdings in the National Stock Exchange (NSE) as a part of its ongoing capital raising initiative. This sale was announced by SBI in a stock exchange filing which revealed that the bank has received appropriate approvals to divest up to 3.89% of its ownership in NSE.
Many public sector banks including SBI have decided to exit their non-core business operations and focus only on core banking operations. This sale is a part of the bank’s decision to exit other business activities. Following this sale, the bank can raise enough capital to be used in its other core banking operations.
At present, SBI owns 5.19% of stocks in NSE. Its subsidiary SBI Capital, on the other hand, owns about 4.3% stake in the stock exchange. This is not the first time SBI has decided to sell its ownership in NSE.
In the year 2016, the bank sold about 5% of its holdings in NSE to investment management firm Veracity Investments for a value of Rs.911 crore. This sale put its total value of NSE at Rs.18,200 crore. The exact value of the transaction and the buyers are yet to be revealed by the bank.
NSE is one of the two major stock exchanges of India. The stock exchange is demutualized with its ownership shared by various banks and insurance firms. India’s largest life insurer LIC owns about 12.5% of NSE. Some of the other major shareholders of NSE include Aranda Investments (Mauritius) Pte Limited, Gagil FDI Limited, SAIF II-SE Investments, Stock Holding Corporation of India Limited, etc.
SBI has already been involved in various capital raising projects for a while. The bank recently revealed its plans to raise capital by selling stakes of its subsidiaries including SBI Capital market, SBI Card, and SBI General. It is also revealed that the bank is planning to raise more than Rs.20,000 crore through stake sale in various ventures.
Source: Business Standard