Markets

ICICI Bank launches QIP with interest flowing from global investors

MUMBAI: India’s second-largest private sector lender ICICI Bank Monday launched a share sale to institutional investors aiming to raise up to Rs 15,000 crore in what could be the fourth such equity offering by domestic financial services firms within a span of two months.

The share sale came on the heels of three large institutions – Kotak Mahindra Bank, Axis Bank and home financier HDFC Ltd – collectively raising about $ 5 billion.

Top global long-only investors such as Oppenheimer, Abu Dhabi Investment Authority, CDPQ and Capital International are likely to bid for shares through the window, which will likely close Thursday, three market sources with direct knowledge of the matter told ET. Individuals investors could not be contacted immediately.

ICICI Bank will be selling shares at an indicative price range of Rs 355-358 apiece, offering 2.35% to 1.53% discount to Monday’s closing prices, according to the terms of the transaction seen by ET. The bank has set a floor price of Rs 351.36 per share, ICICI said in an exchange notification. The floor price represents about 3.5% discount to the bank’s closing price. ICICI Bank shares closed at 363.60, up 1.6% Monday.

SBI MF, Aditya Birla, and Kotak Mahindra MF are among local institutional investors that are also set to buy into ICICI Bank shares. Individual investors could not be contacted immediately for comments.

Bofa Securities, Morgan Stanley, JPMorgan, JM Financial, ICICI Securities and Citigroup are among the book runners to the issue, sources said.

A decision on the final issue pricing and allotment of shares will be taken by next Friday (August 14).

Since the beginning of this financial year, ICICI Bank shares rose 17%, compared with a 21% increase in the Nifty Bank index.

ICICI Bank’s net profit increased 36% to Rs 2,599 crore in the first quarter ended June 2020 from Rs 1,908 crore a year earlier, mainly due to one off gains from the sale of equity stakes in its insurance companies last quarter. Core operating profit rose 15% led by a 20% rise in net interest income (NII), a gauge for any bank’s profitability.

The bank sold equity shares worth 3.96% in ICICI Lombard General Insurance and 1.50% in ICICI Prudential Life Insurance for a net gain of Rs 3,036 crore during the quarter. Domestic loans expanded 10% year on year aided by growth in retail loans, which constituted more than half of the bank’s book.

Indian banking and financial services firms are taking advantage of a sharp rally in public markets since equity markets tanked in March. Earlier last week, HDFC Ltd raised Rs 14,000 crore through an institutional share sale, while Axis Bank could mop up Rs 10,000 crore through another qualified institutional placement.

“ICICI Bank has an attractive business franchise,” said Lalitabh Srivastawa, banking analyst at Sharekhan Brokerage. “Its balance sheet strengths and healthy capitalization are well placed with significant growth prospects over the long term once the pandemic eases.”

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