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Temasek appetite for ICICI pie

Mumbai, June 19: Temasek, the Singapore government’s investment arm, is believed to have stumped a bid of $1 billion (over Rs 4,000 crore) to snap up a sizeable chunk of the 9.88 crore shares floated by ICICI Bank as part of its follow-on issue which opened today.

Temasek already holds 7.37 per cent in ICICI Bank through an investment subsidiary, Allamanda Investments Pte Ltd.

Temasek and the Government of Singapore Investment Corporation (GIC) — another state-owned investment company — have received indications from the Reserve Bank that they will be permitted to raise their stakes in India’s largest private bank to 10 per cent each as part of a special dispensation granted under the comprehensive economic cooperation agreement signed with the island nation two years ago.

The ICICI Bank issue — the biggest capital flotation by an Indian entity if the domestic and overseas tranches are taken together — was a sellout on the very first day. The bank is expected to raise Rs 20,000 crore from the two tranches.

Foreign institutional investors (FIIs), banks and domestic financial institutions funnelled cash into the issue which was oversubscribed 2.74 times by late evening.

The State Bank of India, the country’s largest bank, and the Life Insurance Corporation of India are learnt to have submitted bids of up to Rs 2,000 crore each.

ICICI Bank received bids for 27.08 crore shares. Sources connected with the issue said while the qualified institutional buyer portion was subscribed by 5.4 times, the non-institutional category was also fully subscribed.

“Retail investors have not shown any major interest as yet. However, they are likely to submit applications towards the last two days. Even in this category, we expect a good response,” sources added.

The GIC of Singapore and Prudential Plc, which is ICICI Bank’s partner in mutual funds and life insurance, may also put in their bids before the issue closes on Friday.

The price band for the issue has been fixed at Rs 885-950 per share. Most brokerages have warmed to the issue, attracted by the bank’s long-term growth opportunities.

Some analysts feel that the bank will gain from the robust growth of the Indian economy.

The ICICI Bank issue comes just days after real estate developer DLF raised Rs 9,100 crore from the capital market.

The bank was forced to offer a few lollies to retail investors, including a Rs 50 discount to the issue price. Five per cent of the issue, or Rs 437.5 crore, is reserved for existing retail shareholders.

The minimum bid size is six shares for retail bidders and thereafter in multiples of six.

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