By Sumit Sharma/Bloomberg
Mumbai: ICICI Bank Ltd, India’s most valuable financial services company, sought approval to sell Rs17,500 crore ($4.3 billion) of shares to local and overseas investors in the nation’s biggest offering by filing its application with stock market regulator.
The bank has hired Goldman Sachs Group Inc. and Merrill Lynch & Co. to sell shares in India and the US, according to documents filed with the Securities and Exchange Board of India.
The offer may be raised to Rs20,100 crore depending on demand, the sale document showed.
Funds raised by the sale will be used to meet growing credit demand in India, the world’s fastest growing major economy after China.
ICICI also needs to raise funds to meet new rules for capital and to grow through acquisitions, the Mumbai-based bank said.
Growth course: A sale of Rs20,100 crore shares will meet ICICI Bank’s demand for three years, says CEO K.V. Kamath.
“India is firing on three cylinders of consumption, investments and outsourcing, and ICICI Bank is an excellent play on the first two,” said Karnail Sangha, who manages the equivalent of $6.5 billion in emerging market equities at Robeco Groep NV in Rotterdam. “(It) is a good play on the new capex cycle which is unfolding as we speak.”
ICICI Bank may sell the shares in June, chief executive officer K.V. Kamath had said. Enam Financial Consultants Pvt. Ltd and JM Morgan Stanley Pvt. Ltd will also help manage the deal.
India has lined up investment in infrastructure and manufacturing projects of $500 billion over three years, Kamath had said on 28 April, when he announced a 4.4% increase in the bank’s fourth-quarter profit to Rs825 crore and a 54% gain in income, to Rs8,495 crore. “A number of Indian companies in both the public and private sector have significant investment plans for setting up infrastructure facilities as well as industrial production capacities,” the bank said in the regulatory filing. “The international expansion of Indian companies also provides a major opportunity.”
A sale of as much as Rs20,100 crore shares will be sufficient to meet ICICI Bank’s demand for the next three years, assuming the banking system grows 25% each year, Kamath had said.
The bank was about 71.63% owned by overseas investors as of 5 May, among the highest foreign ownerships in an Indian bank. Overseas investors can buy up to a maximum of 74% in ICICI Bank.
Temasek Holdings Pte and Government of Singapore Investment Corp. together own 9.61% in the Mumbai-based bank. The Centre plans to permit the two entities to increase their stakes in ICICI Bank to 10% each, commerce secretary G.K. Pillai had said on 26 March. The bank’s 25.3% stake is held through American Depository Receipts.
ICICI Bank shares closed at Rs887, up 1.96%, on 15 May on the Bombay Stock Exchange.