The Hindu Business Line : ICICI Bank plans equity issue for Rs 3,500 cr

THE country's second largest commercial bank, ICICI Bank, today said it planned to issue new equity of about Rs 3,000 crore - Rs 3,500 crore to the Indian public.

The board of directors of the bank has cleared the blockbuster equity issue and the bank would seek shareholders' permission at an extraordinary general meeting on March 12.

ICICI Bank shares rose nearly 5 per cent today to set a new-year high of Rs 348 on the NSE. The BSE even saw a large deal of about 10-11 lakh shares towards the fag end of trading at a price of about Rs 337, a stock market source said.

If it goes as planned, the issue would be second in size only to ONGC Ltd's estimated Rs 10,000-crore sale of Government's equity to the public. In the private sector, the bank would beat Reliance Petroleum's record offering of triple option convertible debentures in 1993 that collected about Rs 2,500 crore.

"The previous biggest pure-equity issue was perhaps that of Industrial Development Bank of India that collected close to Rs 2,000 crore," said Mr Prithvi Haldea of Prime Database a Delhi-based independent firm that tracks the primary market for stocks.

Ms Kalpana Morparia, Executive Director of ICICI Bank, says that the bank needs to strengthen its Tier-I capital to grow faster. Ms Morparia said the shares would be offered only to the Indian public and foreign institutional investors. Foreign ownership in the bank currently stands at 72 per cent, including 45 per cent held by FIIs.

"With the current capital (Tier-I comprising Rs 613 crore of equity and Rs 350 crore of preference shares) we are able to grow only at about 12-15 per cent annually," Ms Morparia told Business Line but declined to state what would be the bank's targeted growth rate.

She said India's current economic environment offers great opportunities for retail lending, infrastructure financing and expansion of the new businesses such as life assurance and general insurance that the bank has already invested in.

Asked whether the bank plans to use the money for business acquisitions, she said, "at present we are thinking only of organic growth opportunities". She also said the funds would also not be used to write off non-performing assets. ICICI Bank's provisioning norms are tighter than what the regulator requires. There are no changes to previously articulated policies (on provisioning), she said.

ICICI Bank, however, would follow about 30 companies, including heavyweights such as ONGC Ltd and GAIL India, that have already lined up primary issues. According to Prime Database estimates, equity issues worth nearly Rs 20,000 crore would hit the market in the next two months or so.

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