ICICI Bank plans IPO for brokerage arm
The country's second largest bank plans to offer shares of its investment banking and securities arm – ICICI Securities (I-Sec) – in the stock market, reports Arun Kumar.business Updated: Jan 18, 2008 20:57 IST
After Reliance Power and Future Capital, it's now ICICI Bank's turn to hit the primary market and cash in on the rush for IPOs.
The country's second largest bank plans to offer shares of its investment banking and securities arm – ICICI Securities (I-Sec) – in the stock market. The board of ICICI Bank is expected to decide on a proposal to bring an IPO for I-Sec at a meeting on Saturday, sources said.
A listing on the bourses is likely by end of March, they said.
When contacted ICICI Bank declined to comment. "We have no comment to offer at this point of time," a spokesman said.
Once the board gives its nod, investment bankers will be appointed to manage the IPO, which could range between Rs 1500 crore to Rs 2000 crore in size. The company is expected to enter the market at an enterprise value of around $4 billion.
The proposed IPO is likely to be a combination of offer for sale and fresh issue so that a part of the proceeds will go toward funding I-Sec's capital spending. Sources said that ICICI Bank may also divest a small part of its holdings in I – Sec.
Several securities firms such as Edelweiss, India Infoline and Religare that entered the primary market in late 2007 are trading at a huge premium than the offer price. The market capitalisation of Edelweiss is around Rs 11,000 crore, while that of India Infoline is about Rs 8500 crore and Religare's stands at Rs 4800 crore.
Besides funding the expansion plan, the main objective of the IPO is to unlock the value of ICICI Bank of around Rs 1,38,000 crore. ICICI Bank would, however, have a much higher valuation if its subsidiaries are listed separately, analysts say.
In fact, the bank's insurance business has been valued at more than Rs 50,000 crore. Other than its core banking operation and subsidiaries in insurance, investment banking and securities, the bank also has the largest home grown venture fund—ICICI Venture.
I-Sec offers services in corporate finance, fixed income and equities and operates out of Mumbai with offices in New Delhi, Chennai, Kolkata, New York, London and Singapore.