The Hindu Business Line : Greenshoe option to stabilise ICICI Bank's share price

Mr K.V. Kamath, Managing Director and CEO, ICICI Bank, along with Ms Kalpana Morparia, Deputy Managing Director, addressing a press conference in Mumbai on Saturday. — Vivek Bendre

Mumbai , March 27

THE greenshoe option of Rs 450 crore in ICICI Bank's public issue, will be used to stabilise its share price should it fall below issue price at the time of listing or later, according to investment bankers associated with the offer. Given the issue's size, price volatility is expected in the market.

The bank has appointed DSP Merrill Lynch Ltd as the stabilising agent to buy its shares whenever price falls below the issue level.

Under the greenshoe option, LIC, which holds 7.8 per cent stake in the bank, will loan shares worth Rs 450 crore to DSP Merril Lynch. These shares will be issued to subscribers along with the fresh issue of Rs 3,050 crore. Of the money, thus, collected by lead managers, Rs 450 crore will be kept in an escrow account. This amount will be used by DSP Merrill Lynch to buy shares in the secondary market. The secondary market intervention will continue for a period of one month after listing or whenever the amount of Rs 450 crore is exhausted, a bank official said.

The shares, which are purchased by DSP Merrill Lynch through this operation, will be returned to LIC. Any amount from the Rs 450-crore that remains unused would be returned to ICICI Bank, which will then issue shares worth so much, back to LIC.

The gains that accrue out of the secondary market operations will go towards the Investor Protection Fund of both BSE and NSE equally.

On Friday, the bank announced a price band of Rs 255 to Rs 295 per share for the issue, which is to be subscribed 100 per cent through the book-building route.

At the press conference to announce the issue on Saturday, Mr K.V. Kamath, Managing Director & CEO, ICICI Bank, said that signs of industry revival were emerging with demand for corporate credit picking up.