ICICI Bank plans Rs 8,000 cr float

This will be the largest ever equity float by a private entity in India.

ICICI Bank today announced plans to raise up to Rs 8,000 crore through a combination of domestic and overseas equity issues, making it the largest ever equity float by a private entity in India.

The bank will raise around 75 per cent (Rs 6,000 crore) of the projected capital needs from the domestic market. ICICI Bank will have to limit its ADS (American depository shares) issue to around 25 per cent of the planned capital raising as the foreign shareholding in the bank is already close to the 74 per cent ceiling permitted by the banking regulator.

The largest equity issue by an Indian corporate till date is that of Oil and Natural Gas Corporation (ONGC). In 2004, the government offered to sale a part of its stake in ONGC to mobilise over Rs 10,000 crore.

The core size of the capital-raising exercise by the year-end is expected to be around Rs 7,000 crore ($1.6 billion) and it will carry a greenshoe option of 15 per cent. The board of the ICICI Bank approved the equity expansion plan today. JM Morgan Stanley and DSP Merrill Lynch will be the lead managers for the issue.

ICICI Bank Deputy Managing Director Kalpana Morparia said the issue of fresh equity would help the bank meet its asset growth and capital requirements for adhering to the Basel II norms.

The bank's capital adequacy ratio fell sharply to 11.5 per cent during the second quarter of 2005-06, from 15.20 per cent a year ago. After the issue, ICICI Bank's tier I capital adequacy ratio will be raised from 7.2 per cent to 10 per cent.

Its advances rose by 56.35 per cent to over Rs 1,07,000 crore during the last quarter. The growth was largely contributed by a 73 per cent jump in retail loans to Rs 68,537 crore during July-September, 2005.

The proposed issue will be around 18 per cent of the expanded equity base, considering the price of the bank's shares.

Morparia said the domestic equity market had ample liquidity to absorb an offering as large as the one planned by ICICI Bank. The capital requirements are also meant to support the bank's global growth ambitions.

ICICI Bank recently acquired a small Russian bank, Investitsionno-Kreditny Bank, which provided it a foothold in Russia's emerging market.

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

Life Insurance Corporation of India holds a 9.75 per cent in ICICI 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).