ICICI Bank offers Rs 50 discount to retail investors

Price band fixed at Rs 885-950 a share.

ICICI Bank has fixed a price band of Rs 885 to Rs 950 per share for its follow-on public offer (FPO) of Rs 8,750 crore. The issue will have a greenshoe option of Rs 1,312.5 crore through the book building route.

Retail bidders and existing shareholders will be allotted shares at a discount of Rs 50 per share to the issue price, which will be determined after the offer closes on June 22. The minimum bid size will be six equity shares for retail bidders and existing retail shareholders. Bids will have to be in multiples of six equity shares for all bidders.

The ICICI Bank shares had closed at Rs 908 a share on the Bombay Stock Exchange on Friday. The floor of the price band is 2.6 per cent lower than the closing price and the upper end of the band is 4.4 per cent higher.

The issue will open on June 19. The bank will also raise Rs 10,062.5 crore, including a greenshoe option of Rs 1,312.5 crore through issuance of American Depository Shares. The bank's ADRs were last traded at $46.67. Both the issues will close simultaneously.

The bank has reserved up to 5 per cent of the issue, which means Rs 437.5 crore for existing retail shareholders. Retail shareholders are defined as the ones holding up to 108 shares of the bank as on June 13, 2007. Retail bidders have also been given the option to pay Rs 250 per share on application, Rs 250 on allotment and the balance amount payable on a call which is to be issued by the bank within a period of six months from the date of allotment. The bank has given retail investors the second option of paying the full bid amount minus the discount at the time of application.

Merchant banking sources said if the response from domestic institutions is good, a higher proportion of shares will be allotted to them to increase the Indian shareholding from the current 28 per cent.

Currently, FIIs are able to trade in ICICI Bank shares only among themselves as foreign holding is at the threshold of 72 per cent. Foreign shareholding ceiling in private sector banks is 74 per cent.

At present, Allamanda Investments Pte Ltd (an affiliate of Temasek) holds 7.3 per cent in ICICI Bank and Government of Singapore 2.24 per cent.

Qualified institutional bidders, which have to pay 10 per cent margin on application, have the option to pay Rs 250 less the margin amount on confirmation of allocation and the balance on allotment.

Non-resident bidders, including FIIs, will require prior approval of the Reserve Bank of India to subscribe to partly paid up shares.

The bank has appointed DSP Merrill Lynch as the share price stabilising agent. Goldman Sachs, DSP Merrill Lynch, J M Morgan Stanley and Enam Financial are the lead managers to the issue.