SBI gets a slice of ICICI stake

State Bank of India's (SBI) investment kitty now includes Rs 300 crore worth of shares of its competitor and the second largest lender, ICICI Bank. This is over 65 per cent of the total addition made by SBI to its equity investments in 2006-07.

The bank had bid for Rs 5,500 crore worth of shares in ICICI Bank's follow-on offering of Rs 8,750 crore, excluding the green shoe option, last month. The bank has been informed, informally, that it has been allotted Rs 300 crore of shares, said a senior SBI official.

Life Insurance Corporation (LIC), which had placed bids for almost the entire issue at Rs 8,400 crore, has been allotted close to Rs 475 crore worth of shares. LIC was holding a 7.8 per cent stake in ICICI Bank at the end of March 2007.

SBI did not hold any ICICI Bank shares though it held equity investments of Rs 1,973.48 crore at the end of March 2007.

SBI increased its investments in equity shares in 2006-07 by Rs 455.46 crore. Public sector banks together had invested a total of Rs 8,929.22 crore at the end of 2006-07, up from Rs 6,105.93 crore a year earlier.

SBI's investment committee considers the business rival to be a good investment opportunity, and the investment forms a part of the government-owned bank's treasury operations.

A senior SBI official had earlier said, "Though we compete with each other, an exposure to the ICICI shares as part of our portfolio investment reflects the prospects of the sector and the returns it promises. Keeping in view the high growth that the Indian economy is enjoying, the financial sector entities will have huge business opportunities, providing room for all players."

ICICI Bank priced its Rs 10,062 crore follow-on equity offer, including the green shoe option, at Rs 940 a share. The bank also raised $2.14 billion through its American depository share (ADS) offering, which was priced $49.25 per ADS, translating into a price of about Rs 1,002.5 per equity share.

The fully paid-up shares worth about Rs 5,461 crore issued as part of the follow-on equity offer were listed on the Bombay Stock Exchange and the National Stock Exchange.

The partly paid-up shares issued to retail investors would get listed after the bank receives the requisite additional amounts. ICICI Bank shares closed at Rs 981.55 a share on the BSE, down 2.37 per cent.