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ICICI issue sold out on the first day

ICICI Bank's follow-on public offer of Rs 10,000 crore in the domestic market was subscribed over 2.7 times on the first day, reports Arun Kumar.

business Updated: Jun 19, 2007 20:23 IST
Arun Kumar
Arun Kumar
Hindustan Times

ICICI Bank's follow-on public offer of Rs 10,000 crore in the domestic market was subscribed over 2.7 times on the first day. The bank is raising a similar amount on the US bourses, taking the total size of the issue to around Rs 20,000 crore ($5 billion).

Temasek and CalPERS among foreign institutional investors and the State Bank of India, General Insurance Corporation, Life Insurance Corporation and Reliance Industries put in applications on the first day, investment banking sources said.

The ICICI Bank issue was also a success in terms of retail interest, said a leading fund manager on condition of anonymity. "As India continues to grow at 8 per cent plus the financial sector is bound derive the biggest benefit," he added. ICICI Bank's shares rose to Rs 26.25, or 2.89 per cent, to Rs 944.40 on Tuesday while the 30-share benchmark Sensex rose 215.36 points, or 1.53 per cent, to 14,295.50.

ICICI Bank had set an indicated price band for the book-built issue at Rs 885-950 a share, with retail investors getting a Rs 50 discount on the final price that will be arrived at after the issue closes on June 22.

Most of the bids were from institutions, which have an option to withdraw before the issue closes on Friday. Retail investors are expected to put in their applications on the last day of the issue. In fact, existing ICICI Bank shareholders can put in two applications for less than Rs one lakh each, which will not be counted as multiple applications.

"There is keen interest in banking stocks among foreign investors as these shares are difficult to get from the secondary market. The issue gives them an opportunity to build a banking portfolio," said the head of institutional sales of a leading stock broking house.

"It is a retail success story... to build this kind of an organisation at such a fast pace is difficult," said Abhishek Shukla, analyst at First Global Securities.

After the issue ICICI Bank's market capitalisation will cross Rs 100,000 crore, up from Rs 85,000 crore now. The State Bank of India, along with its seven associates, control almost a fourth of India's banking business and have a market capitalisation of around Rs 70,000 crore. Banks are raising fresh funds to expand in rural areas as well as overseas.

The ICICI Bank issue is the biggest in the history of the Indian capital market. Prior to this, the government disinvestrment of a 10 per cent stake in ONGC in 2004 was for Rs 10,500 crore.

First Published: Jun 19, 2007 20:02 IST