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Tuesday, May 01, 2007

ICICI Bank to raise Rs 20,000 crore

The country’s largest private sector player, ICICI Bank has decided to raise fresh equity capital to the tune of Rs 20,000 crore via issuances, both in the domestic market and by issue of American Depository Shares (ADS) in the international market. This will be the largest follow-on public issue in the country.

The board of directors of the bank approved the raising of capital at the meeting held on Saturday. The bank plans to raise up to Rs 15,000 crore through the ADS issue, while around Rs 5,000 crore will be raised through a follow-on public offer in the domestic market, of which 50% will be kept open for subscription from retail investors. The IPO process is expected to kick off on Monday. “The issue is likely to hit the market by June 2007. The bank may look at greenshoe options going forward, if required,” said K V Kamath, the bank’s MD and CEO.

However, the raising of fresh equity capital will be subjected to an approval from the shareholders. The issuance is likely to offload up to 20% of the bank’s stake. Kalpana Morparia, the bank’s joint managing director, said, “The banking system is likely to witness 20-25% growth in credit during the current financial year. The new guidelines for capital adequacy released by the Central bank, coupled with strong demand for credit from the corporate sector necessitates that the bank adopts a proactive approach towards capital raising activities.”

This apart, the bank also plans to utilise the proceeds of the issuances for catering to demand from the rural markets also. Morparia pointed out that the funds mobilised through these issuances should take care of the bank’s funding requirements at least for the next two-three years.

In another development, the bank’s board of directors also approved the elevation of Madhabi Puri Buch to the post of an executive director. The board also took into account the results of the bank for the year ended March 2007. The bank reported a 4% growth in its net profit for the quarter ended March 31, 2007, as it was hit by a one-time charge of Rs 310 crore towards general provisioning norms proposed by the central bank in January 2007.

In its quarterly policy review in January 2007, the RBI had raised the provisioning requirement for standard assets in the real estate sector, outstanding credit card receivables, loans and advances qualifying as capital market exposure and personal loans to 2%, reports The Economic Times.

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