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ICICI Bank issue priced at Rs 940

Mumbai, June 23: ICICI Bank today fixed the issue price of its follow-on public offer at Rs 940 per share. The country’s largest private sector bank also priced its American depositary share (ADS) offering of $2.14 billion at $49.25 per share, translating into a price of approximately Rs 1,002.5 per share.

Domestic retail investors will get the shares at Rs 890 apiece after a discount of Rs 50. The price of Rs 890 is 7 per cent discount to the closing rate of Rs 953 on the BSE on Friday.

According to the bank, the issue price represents a premium of 3.6 per cent to the average closing price since the announcement of the offer on April 28.

ICICI Bank had announced a price band of Rs 885-950 for the issue.

Capital market circles had estimated that the bank may announce the issue price at the top end of the band as it had received a good response from institutional investors. Most of the bids from institutions was in the range of Rs 900-940 per share.

The price of the ADS issue translates into a premium of around 6.6 per cent over the domestic issue price. Each ADS represents two equity shares of ICICI Bank. The ADS offering has a greenshoe option of $0.32 billion.

While the size of the domestic issue (minus the greenshoe option) is Rs 8,750 crore, the consolidated capital that will be raised from both the domestic and overseas issues will be Rs 17,500 crore.

The offer was subscribed 11.5 times with bids received for more than 113 crore shares against an issue size of 9.88 crore shares.

Data available from stock exchanges on Friday showed that the portion reserved for qualified institutional buyers was subscribed by more than 21 times.

In this category, the issue received bids for more than 101 crore shares against 4.69 crore shares reserved.

Some of the key names that invested in the issue included Temasek, Warbug Pincus, the Life Insurance Corporation and the State Bank of India.

However, despite high expectations, the retail portion of ICICI Bank's FPO was modest. The subscription level here was put at just over 1.03 times with 3.40 crore shares bid against 3.28 crore shares reserved for this category. The relatively modest response came even as the bank offered various incentives. Apart from reserving upto 5 per cent of the issue for existing retail shareholders of the bank, ICICI Bank said the minimum bid size will be six shares.

The bank also offered two payment options to retail investors. Under Payment Method-1, retail bidders are required to pay Rs 250 per share on application, Rs 250 per share on allotment and the balance amount on a call which is to be issued by the bank within a period of six months from the date of allotment, and the discount would be adjusted against the call amount. Under payment method-2, retail bidders are required to pay the full bid amount less the discount, at the time of application. Capital market success expect the ICICI Bank issue to meet with a positive response from all quarters.

ICICI Bank also met with a good response for its US offering, which is learnt to have been subscribed by five times. Including the greenshoe option in both these issues, the total size was put at over Rs 20,000 crore.

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