ICICI Ltd plans to raise fresh equity through American Depository Receipts (ADR) as recommended by various global investment banks, to shore up its tier I capital which currently stands at 8.3 per cent of the risk-weighted assets.
Sources said the proposal was being evaluated and a decision would be taken at the board meeting expected in end-June. The issue size will also be decided at a later date much closer to the actual float.
The total capital adequacy ratio is 12.5 per cent after taking into account the 4.2 per cent tier II capital. However, internationally much weightage is given to tier I capital. Credit rating agency Crisil has observed that the loss charges emanating from a portfolio under stress would constrain profitability and impair the capital position of ICICI.
More From This Section
According to sources close to ICICI, the latter has received indications from Morgan Stanley Dean Witter, CS First Boston and Salomam Brothers expressing their interest in lead managing the issue.
ICICI's decision to take the ADR route comes close on the heels of global companies like Korea Telecom mopping up around $2.5 billion from the US market. The other recent successful issue was that of Siam Commercial Bank which raised $600 million.
Sources said that once the decision was approved by the board, the institution would decide the size of the issue in consultation with an international merchant banker.
The ICICI scrip has been moving upwards on the Bombay Stock Exchange (BSE) and touched a peak of Rs 78 on Friday. The scrip started moving northwards on rumours of Prudential Capital planning to pick up a minority stake in the financial institution.
ICICI has identified fund raising resources on lower cost as one of the key challenges for 1998-99. The ADR issue would bring in cheap funds and an international reputation for the institution. name="description" content="The National Stock Exchange (NSE) has decided to boost retail debt trading in government securities after spreading the equity cult across the country via electronic trading terminals.">