| New direction
Mumbai, June 13: ICICI Bank, which will float India’s biggest share flotation next week, is earmarking 5 per cent of the domestic issue for its small shareholders — people who hold just over 100 shares in the company.
The bank is aiming to raise Rs 17,500 crore from the issue — half the amount in India and the rest overseas.
The unique feature of the follow-on offering is that shareholders who hold shares valued at Rs 1 lakh will be eligible to apply. The value of the shares will be determined on the basis of the closing price on the National Stock Exchange on June 13.
On Wednesday, the stock closed on the NSE at Rs 913.95 and, based on this price, those who hold 109 shares of the bank will qualify for the reservation.
ICICI Bank’s issue is slated to open for subscription on June 19 and close on June 22. The bank had earlier filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) and with the Registrar of Companies (RoC), Ahmedabad for public issue of equity shares aggregating to Rs 8,750 crore.
The ICICI Bank issue comes just days after DLF's mega offer. The DLF maiden offer, which has already been over-subscribed, comes in a price band of Rs 500 to Rs 550 per share. At this price band, the company could raise between Rs 8,750 and Rs 9,625 crore. However, ICICI Bank’s offering also includes a greenshoe option, which if exercised could take the total offering (domestic and overseas) to over Rs 20,000 crore. It could then become the country’s biggest share sale.
ICICI Bank is raising these funds to augment its capital base to meet the capital requirements arising from growth in its assets, particularly the loan and investment portfolio due to the growth of the Indian economy and also to comply with regulatory requirements. The mobilisation is also to meet requirements arising from meeting the Basel II guidelines, which will come into effect from March 31, 2008. These norms will require banks like ICICI Bank to maintain higher capital for various asset classes.
When it announced the huge fund raising programme, ICICI Bank said there was a robust demand for bank credit because companies had drawn up massive investment plans.
The bank estimates $500 billion of investment will be needed for infrastructure and manufacturing projects in India during the next three years.
Like ICICI Bank, other banks are also planning follow-on offerings to meet their growing capital requirements. These include the State Bank of India and the HDFC Bank. Analysts expect ICICI Bank’s offering to meet with a good response even though it will open just a week after DLF’s issue.
In its DRHP with Sebi, ICICI Bank has indicated that it may decide to allot the equity shares to existing retail shareholders and retail individual bidders at a differential lower price compared with the price for qualified institutional buyers and non institutional bidders.
ICICI Bank added that existing retail shareholders may submit a bid in the existing retail shareholders reservation portion up to a value of lakh as well as a bid in the retail portion up to a similar value.
These bids, it said, shall not be considered as multiple applications.