ICICI Bank will raise Rs 4,020 crore by selling a 24% stake in its brokerage and investment banking arm, ICICI Securities Ltd in an initial public offer (IPO) which will kick off on March 22 and close on March 26, one person close to the sale told ET.
“The price band of the sale will be in the Rs 519 to Rs 520 per share range and all the proceeds will be headed to the bank. The book will open for anchor investors or large local and foreign institutions on March 21. Retail investors can apply between March 22 and March 26,” said the person close to the issue. Five per cent of the shares will be reserved for ICICI shareholders, the bank said.
ICICI Securities is India’s largest brokerage by revenues and by investors and includes the retail broking arm ICICIdirect.com. This will be the third issue from ICICI stable in three years and follows the Rs 6,000 crore ICICI Prudential Life Insurance IPO in 2016 and Rs 5,700 crore ICICI Lombard General Insurance IPO in 2017.
ICICI Securities is 100% owned by the bank and all the proceeds from the issue will go directly into the bank’s other income kitty in the financial year ending March 2018. The 24% stake sale values the company at Rs 16,750 crore. ICICI Bank will continue to hold 74% stake in the company post the issue.
The proceeds from the issue will be precious at a time when the bank is struggling to contain non performing assets and was hit by treasury losses in the quarter ended December 2017. Consolidated net profit fell 32% due to lower income from treasury even as provisions for non performing assets (NPAs) remained elevated. Gross NPAs increased to 7.82% from 7.20% a year ago, though lower than 7.87% reported in the quarter ended September.
The bank board had approved the share sale in November 2017, following which a draft red herring prospectus (DRHP) was filed with the Securities and Exchange Board of India (SEBI) on December 15 2017. The SEBI go ahead came in February.
Results in the company’s DRHP showed that ICICI Securities its net profit in the first half of the current fiscal rose 47% to Rs 246 crore in the six months ended September 2017 from Rs 167 crore a year earlier. Brokerage revenue, the bank’s main income rose 19% year on year.
Taking ICICI Securities is in line with ICICI bank’s plan to unlock value in the bank’s subsidiaries. Another of ICICI Bank’s subsidiary ICICI Prudential Mutual Fund is also the largest asset manager in the country with assets under management of Rs 2.93 lakh crore as of December 2017.