Mumbai: ICICI Bank Ltd. may raise $2.5 billion in the biggest overseas share sale by an Indian company, sources in the know said.
India’s second-biggest bank sought regulatory approval to sell American depositary receipts as early as this month. The Mumbai-based bank is also likely to raise a similar amount at home as part of a fundraising plan announced in April.
The fastest economic growth in 60 years has lured overseas investors, helping India last month to become the third emerging stock market after China and Russia to surpass $1 trillion in value. ICICI Chief Executive Officer K.V. Kamath said on 28 April the bank must bolster its capital to support a doubling in investment in infrastructure and manufacturing.
“The bank should get a good response overseas, and even in the local market there is a lot of \appetite for good quality paper,” said A. Balasubramaniam, who manages $6 billion at Birla Sun Life Asset Management in Mumbai and owns ICICI shares.
“The issue will ensure that capital is no longer a constraint for the next three years.”
ICICI hired Merrill Lynch & Co. and Goldman Sachs Group Inc. to sell shares in India and overseas, the people said. Enam Financial Consultants and JM Morgan Stanley will also arrange the domestic portion of the sale, they said.
Charudatta Deshpande, a spokesman for ICICI Bank, and Mona Kwatra, a spokeswoman for Merrill Lynch in Mumbai, declined to comment. Eddie Naylor, a Goldman Sachs spokesman in Hong Kong, also declined to comment.
Shares of ICICI Bank rose 0.6% to Rs939.35 at the 3:30 p.m. closing on the Bombay Stock Exchange, valuing the bank at $21 billion. The stock has more than tripled in three years.
The bank plans to sell Rs175 billion ($4.3 billion) of shares in India and the US, according to documents filed with the Securities & Exchange Board of India. The sale may be increased to Rs201 billion if there’s sufficient demand.
Infosys Technologies Ltd., India’s second-biggest computer services provider, sold $1.6 billion of shares to US investors in November, the biggest overseas sale by an Indian company.
Overseas shares of State Bank of India, the nation’s biggest with 100 million clients, yesterday traded in London at $85.50, or a 23% premium to the local stock, reflecting appetite abroad for Indian banks. ICICI Bank’s ADRs on the New York Stock Exchange were at $48.45, about a 5.2% premium. Each depositary receipt for both banks represents two underlying local shares.