ICICI FPO opens tomorrow with strong QIB interest

New Delhi, June 18 (UNI) Riding high on the strong investment pipeline in the economy, ICICI Bank Ltd's follow-on-public issue opens tomorrow at a price band of Rs 885 to Rs 950.

ICICI Bank stocks saw a rise of 9.85 points to close at Rs 917.85, up 1.08 per cent today.

The FPO plans to raise Rs 8,750 crore in the domestic market through issue of follow-on-public offer of equity share of Rs 10 each, which closes on June 22.

Expected to mop up further liquidity from the secondary market, the FPO comes with incentives like five per cent discount to retail investors in the FPO.

However, like the DLF IPO which struggled to get retail investors, the ICICI FPO might dissuade the retail investors.

Considering that ICICI is a index heavyweight, a three to four per cent correction in the market might see the stock prices tumble to Rs 885 from its present Rs 917.

Hence, a retail investor might prefer to stay away and watch if the prices go out. This essentially means the FPO is for the QIBs who are expected to be the major subscribers to the FPO.

ICICI Bank, however, feels the discount component in the FPO will be lucrative for the retail investor and will fully subscribe to the FPO.

According to company sources the road shows overseas have generated a large interest with the QIBs and in the grey markets of Baroda the share is trading at a four per cent premium.

The road show for the overseas issue started on June 15 in Singapore.

In addition, there is a greenshoe option under which the bank may allocate additional equity share up to Rs 1,312.5 crore and operate a price mechanism post-listing, with DSP Merill Lynch as the stabilising agent.

The greenshoe option says ICICI is a precautionary step associated with any public issue and not an indication that the Bank expects the prices to fall once listed.

Of the consolidated Rs 20,125 crore, the capital raising exercise also plans to mop up 10,062.5 crore including a greenshoe option of Rs 1,312.5 crore through an issue of American Depositary Shares (ADS) listed in the New York Stock Exchange (NYSE).

UNI