State owned Bank of India (BoI)'s capital raise via a qualified institutional placement (QIP) to investors has received strong demand with large domestic and foreign investors lining up cash ensuring that the bank has received bids worth close Rs18,000 crore before subscription was closed this morning.
Pinebridge Capital Investments, Morgan Stanley Invesment Management, Millennium LLC, Jupiter Asset Management, Moon Capital Management LP and US based trading firm Jane Street Capital are among the large foreign investors who have placed bids, people familiar with the details said.
Domestic asset managers like ICICI Prudential Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, ICICI Prudential Life Insurance, HDFC Life Insurance, SBI Life Insurance and SBI General Insurance have also bid for a slice of the bank's shares.
"Demand was strong since the issue was launched last evening and we have ended up with more than 4.5 times of subscription. Over two dozen institutional investors have bid for the shares. The strong demand reflects the bank's strong balance sheet and also the positive outlook on the banking sector in India," said a person involved in the issue.
The bank's spokesperson could not be immediately reached for comment.
The state-owned lender had set the floor price for the QIP issue at Rs 105.42 a share a discount of 4.3% to the stocks close on Tuesday. Shares of the bank ended nearly 1% higher on the National Stock Exchange at Rs 110.20 on Tuesday.
BoI had expected to raise a minimum of Rs 2250 crore with an option to retain over subscription of the same amount. The bank is now likely to retain the whole Rs 4500 crore, people familiar with the deal said.
The allotment of shares to investors is likely to be completed on Friday.
This is the second largest share sale by a public sector bank this fiscal and follow's Union Bank of India's Rs 5000 crore issue in August.
The infusion of funds will enhance the bank's capital adequacy by 60 basis points to around 16.20%. As of September-end, the capital adequacy ratio of the bank was 15.63%. One basis point is 0.01 percentage point.
For the September quarter, the bank reported a 52% year-on-year (YoY) growth in net profit to Rs 1,458 crore. The net interest income grew by 13% on year to Rs 5,740 crore.