ICICI Bank extends goodies for retail investors

ICICI Bank is offering baits to entice retail investors to invest in its equity share issue aimed at mobilising Rs 10,062.5 crore from the domestic market, including a greenshoe option (or, the option to retain a part of the oversubscription) of Rs 1,312.5 crore.

Apart from a discount of up to 5%, the bank is providing small investors an easy option to pay for the shares on offer through the book-building process (an auction conducted by investment bankers).

Retail bidders also have the option to pay only Rs 250 per share on application, Rs 250 on allotment and the balance on call, which will be issued within six months of allotment. ICICI Bank will also list the partly paid shares for the benefit of retail investors.

ICICI Bank has defined retail investors as individual bidders, including Hindu undivided families and non-resident Indians (NRIs), whose bid amount does not exceed Rs 1,00,000. Up to 5% of the issue, or Rs 437.5 crore, has been reserved for existing retail shareholders of the bank. ICICI Bank officials said NRIs would have to take the Reserve Bank of India’s permission to make part payments in the issue.

The bank is likely to announce the price band for the book-built issue and the discount for retail investors on Sunday. The bank is expected to fix the price band around the market price of its shares. The bank’s shares today closed at Rs 905.75, down 0.78% , on the Bombay Stock Exchange.

The bank will raise an equivalent amount through simultaneous issue of American Depository Receipts (ADRs). The bank will launch roadshows for the ADR issue in Singapore tomorrow. The domestic issue opens on June 19 and closes on June 22. ICICI Bank is raising a total of Rs 20,125 crore through simultaneous domestic and overseas offers making it the largest ever equity raising by an Indian company.

K V Kamath, ICICI Bank’s managing director and CEO, giving reasons for such large equity raising, said “We continue to maintain that the ICICI Bank growth story is linked to the India story. At present, we are seeing balanced economic growth in the country, both in the manufacturing and services sectors. There is a healthy investment pipeline in both the manufacturing and infrastructure sectors of at least $500 million which we would see in the next 30 months or so.”

“The Indian financial sector have to be prepared to meet this growth. As compared to the Chinese banking system, the Indian banking system has a lot to achieve. We see this as an opportunity and we need to create a banking sector commensurate to these opportunities; that’s how we came to this number of $5 billion,” added Kamath.

Kalpana Morparia, chief strategy and communications officer of ICICI Group, said Temasek Holdings Pte and Government of Singapore Investment Corporation (GIC) can raise their holdings up to 10% each, but the bank has not received any communication from them stating that they would be subscribing to shares in the issue. At present, Allamanda Investments (an affiliate of Temasek) holds 7.37%, the Singapore government holds 2.24% and GIC holds 1.05% in ICICI Bank.