Financial Daily from THE HINDU group of publications
Friday, Nov 25, 2005
Money & Banking - Public Offer
Retail investors to get 5% discount in ICICI Bank's public issue
MEGA OFFER: Mr K.V. Kamath, Managing Director & CEO, ICICI Bank, with Ms Chanda Kochhar, Executive Director, at a press conference in Mumbai on Thursday. - Paul Noronha
Mumbai , Nov. 24
ICICI Bank has decided to offer shares to domestic retail investors (investing up to a maximum of Rs 1 lakh) at a five per cent discount to the issue price in its public issue opening on December 1.
The total issue size is Rs 8,050 crore, which includes the domestic issue of Rs 5,000 crore, a greenshoe option of Rs 750 crore and an American depository share (ADS) issue of Rs 2,300 crore (including a Rs 300-crore greenshoe option)
The ADS issue will also include a public offering without listing in Japan, said Mr K.V. Kamath, Managing Director and Chief Executive Officer.
The price band for the book-building issue will be announced a day before the issue. The bank has reserved up to five per cent of the issue for existing retail shareholders (whose holding does not exceed Rs 1 lakh based on the closing price on the NSE on November 25.)
All the domestic retail investors will be offered the share at a price 5 per cent lower than the issue price determined through the book-building process. The lead book runners for the issue are JM Morgan Stanley and DSP Merrill Lynch.
Retail investors have the option to pay Rs 150 per share on application with the balance payable on allotment, Mr Kamath said at a press conference. The last time the bank came out with a public issue was in April 2004 when it raised over Rs 3,400 crore at a price of Rs 280 per share.
ICICI Bank expects significant retail participation, going by the past experience. There was huge retail participation in case of mega-public sector units' offers, which provided a 5 per cent discount, said a merchant banker.
Currently, foreign investors own 72 per cent of ICICI Bank, the country's second biggest bank. The ceiling for foreign investment in Indian banks is 74 per cent. The bank will use the funds to meet its growing credit requirements mainly in areas such as consumer credit, international business and rural credit, Mr Kamath said.
This capital would give the bank a buffer for internal growth, Mr Kamath said. But a year later, banks would have to explore hybrid instruments to raise capital, he added.
The bank has a one-third market share in retail credit and retail assets form over 60 per cent of its total lending portfolio. This sector has so far seen a compounded growth of 45-50 per cent, he said.
Referring to the international business, Mr Kamath said ICICI has a 15 per cent market share of total inward remittances.
The bank has branches in Singapore, Hong Kong and Bahrain and subsidiaries in the UK and Russia. Mr Kamath said the rural sector is still untapped and is likely to see huge growth in about two years.
The shares of ICICI Bank closed on Thursday at Rs 538.50 on the BSE, up two per cent from the previous close of Rs 527.95.
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