ICICI Bank plans local, ADS floats

ICICI Bank is planning concurrent domestic and overseas equity issues to raise about Rs 8,050 crore.

"The bank proposes to make the equity issue and ADS (American depositary shares) offering concurrently for an amount aggregating Rs 7,000 crore, each with a greenshoe option together amounting to Rs 1,050 crore," ICICI Bank said in a draft red-herring prospectus filed with the Securities and Exchange Board of India.

The bank is expected to hit the market with the offering before the end of December 2005.The domestic issue is likely to constitute about 74 per cent of the offer and the balance an ADS offering.

DSP Merill Lynch and JM Morgan Stanley are book-running lead managers for the issue.

The bank needs additional capital to support future asset growth emerging from increase in its asset base and investment portfolio as well as to adhere to Basel-II norms. The bank's capital adequacy ratio (CAR) was 11.5 per cent at the end of September 2005, having declined sharply during the second quarter of 2005-06 from 15.20 per cent a year ago.

The Reserve Bank of India requires banks to maintain a minimum ratio of capital to risk-adjusted assets and off-balance sheet items of 9 per cent. At least half of which must be tier-I capital. As on September 30, 2005, ICICI Bank's tier-I CAR was 7.2 per cent, which, after the issue, will increase to 10 per cent.

The bank's advances rose 56.35 per cent to over Rs 1,07,000 crore during the second quarter of 2005-06. A 73 per cent jump in retail loans to Rs 68,537 crore, during the same period, largely contributed to this growth.

The bank's deposits increased 68.2 per cent to Rs 1,204,52 crore as on September 30, 2005, compared with Rs 71,598 crore during the year-ago period.

ICICI Bank had, in April 2004, raised Rs 3,050 crore through a domestic public issue. In March this year, the bank completed a sponsored ADS issue at $21.11 per share, raising foreign holding in it to 73.05 per cent.

Life Insurance Corporation of India holds a 9.75 per cent in the bank. New India Assurance Company (2.37 per cent), General Insurance Corporation (1.31 per cent), National Insurance Company (1.08 per cent), private corporate bodies (3.91 per cent) and Bajaj Auto (3.10 per cent) are other stakeholders in the bank.