Mumbai: ICICI Bank Ltd’s issue that closed on Friday, was oversubscribed 11.49 times according to data available when Mint went to press with afinal update expected later in the night.
That would mean that the issue attracted bids of close to Rs1 trillion, higher than the current market capitalization of the bank, which was Rs85,775 crore based on the stock’s closing price on the Bombay Stock Exchange on Friday.
“It’s been an overwhelming response,” said ICICI Bank managing director K.V. Kamath, while speaking to CNBC-TV18. “We are riding the India wave.”
However, retail investors applied for just as many shares as were reserved for them. According to the latest available information, 94% of the retail portion of ICICI Bank’s issue was subscribed.
However, bids were still being tallied and a senior executive at the bank said that the retail portion was (fully) subscribed. Of the 98.87 million shares on offer, 35% was reserved for retail investors.
ICICI Bank is also simultaneously making an offer to US investors as part of a $4.2 billion (Rs17,220 crore) share sale with a 15% over-allotment option that would raise the total size of the issue to almost $5 billion. The US portion could be subscribed four-five times, said a banker familiar with the issue who did not wish to be identified.
The American depository shares (ADSs) issue will close late Friday night, India time. The bank will price the issue on Saturday. According to executives at ICICI Bank who did not wish to be identified, the issue was subscribed many times over at Rs950, the higher end of the price band of Rs885-950 that the bank had set for its shares. Retail investors will get a discount of Rs50 to the final price fixed.
ICICI Bank received the largest number of bids from foreign and domestic institutions. These qualified institutional buyers (QIBs), as such investors are known, subscribed for more than 23 times the number of shares reserved for them.
They have remained the most aggressive bidders for the issue, with large institutions, including Temasek Holdings, Government of Singapore Investment Corp., Citigroup, Warbug Pincus, and Life Insurance Corp. of India, putting in substantial bids.
“The response from institutions has been better than expected,” said Deven Choksey, managing director of KR Choksey Securities, a domestic brokerage. “This is because they feel that the gestation period for deploying capital from a bank public issue is comparatively less. Retail investors were waiting in the wings because they were unsure of what they would get of the public offering,” he added.
The research head of another brokerage said that retail investors were not as enthusiastic about the public offeringas they could always buythe stock from the secondary market.
Last week, property developer DLF Ltd raised $2.25 billion in India’s biggest initial public offering, but the retail response there was also muted.
ICICI Bank’s shares closed at Rs953.75, up 0.43% over their previous close, while Bankex, the banking index of BSE closed at 7,835.34, up 0.10%.
The Sensex, BSE’s benchmark index, however lost 0.22% to close at 14,467.36.
Gaining Ground (Graphic)
(M.C. Govardhana Rangan of Reuters also contributed to the story.)