Temasek Holdings and the Government of Singapore Investment Corp. (GIC), two investment arms of Singapore, have made aggressive bids for the ICICI Bank Ltd’s public issue that was subscribed 5.18 times on the third day.
The per-share pricing of the issue is expected on Friday after it closes.
Temasek, through its investment arm, Allamanda Investments, already has a 7.34% stake in the bank, while GIC has a 2.24% stake.
“It’s difficult to say to what extent their stakes will go up. It all depends on the overall institutional subscription (to the issue) and allotment of shares,” said one senior ICICI Bank executive who did not want to be named.
Temasek and GIC’s combined stake will go well beyond 10% after the issue.
The Reserve Bank of India has allowed the two Singapore government arms to hold up to 10% stake each in ICICI Bank.
Under the Indian banking law, no single entity is allowed to hold more than 10% stake in a bank. Until recently, the Indian central bank was treating Temasek and GIC as one entity as both of them are Singapore government’s arms and did not allow them to hold more than 10% in the bank, jointly.
For the domestic part of ICICI Bank’s issue, the qualified institutional buyers subscribed 10.38 times on Thursday, but the retail portion was subscribed only 10.27%.
Typically retail investors wait until the last day before putting in their applications.
Retail investors trickled in on the third day of the issue, putting in bids for 3.37 crore shares against 32.8 crore reserved for them.
According to people familiar with the matter, large bids have come in from Ahmedabad and Vadodara in Gujarat, which are typically major centres for retail share applications. Foreign investors, banks and mutual funds have put in bids for 487.63 crore shares against 46.96 crore reserved for the category.
If the retail portion is not fully subscribed by Friday, when the issue closes, the unsubscribed portion will be allotted to qualified institutional buyers.
While qualified institutional investors, such as foreign investors, banks and mutual funds, will get proportional allotment in the domestic issue, the allotment of shares for the American depository receipts (ADRs) is discretionary.
“The lead managers to the issue decide on the overseas allotment depending on the profile of the investor,” explained an investment banker who is not related to the ICICI offering, but did not want his name cited.
According to current norms, foreign shareholding in a private Indian bank can go up to 74%.
Currently, foreign investors hold a 71.13% stake in ICICI Bank. Among the domestic institutions, Life Insurance Corp. of India (LIC) holds 7.8% and Bajaj Auto Ltd has a 4.12% stake in the bank. LIC as well as Unit Trust of India and State Bank of India have made bids for the shares, according to investment bankers familiar with the bids.
ICICI Bank shares closed on Thursday at Rs949.70, gaining 0.20% on the Bombay Stock Exchange.