SBI to rope in investment banker to help sell non-core assets

The country’s largest bank has investments in 11 entities

To divest its stake, either partially or fully, in some of its strategic investments, State Bank of India is planning to rope in an investment banker who will assist in identifying buyers interested in picking up a stake in the assets.

India’s largest bank has strategic investments in 11 entities — IL&FS, NSE, BSE, Central Depository Services Ltd, UTI, Clearing Corporation of India, SIDBI, Central Warehousing Corporation, National Securities Depository Ltd, Asset Reconstruction Company (India) Ltd, and National Payments Corporation of India.

Among these entities, SBI has more than 10 per cent stake in six of them — CWC (21.67 per cent), CCIL (21.20), ARCIL (19.95), UTI (18.24), SIDBI (13.14), and NPCI (11.11).

In FY17, SBI moped up ₹2,662 crore via sale of non-core assets/strategic investments. In its annual report for FY16, the bank said it will consider divestment of non-core investments/subsidiaries to add more than ₹3,000 crore to optimise its available capital.

Even as banks are persuading large corporate borrowers, who are under stress, to sell non-core assets, dilute their shareholding and bring in strategic investors to reduce debt and improve viability, they themselves are trying to sell non-core assets to shore up capital and provide for bad loans.

The government’s ‘Indradhanush’ plan for revamp of public sector banks had identified value unlocking from non-core assets as one of the key areas for banks to raise money.

SBI, in its request for proposal for appointing merchant bankers, said it has been making investments in companies that are fundamental for the nation’s financial and other infrastructure — stock exchanges, depositories, clearing corporations, warehousing corporations, and credit rating agencies.

The investments in such companies are mainly for overall development of the markets, and deriving benefits from such opportunities emerging from this space.

“A number of such strategic investments have been made at the time of formation of these investee companies to help them raise capital and credibility required at the initial stage.

“The bank, which has identified a few of such investments for divestment….proposes to appoint an investment/merchant banker who will assist the bank in identifying buyer who may be interested in buying a stake in the identified strategic investment(s), manage the process of divestment and facilitate consummation of the transaction,” said the bank.