Govt asks ICICI to cap foreign holding at 49

MUMBAI, Aug 25: The finance ministry has stipulated that the total foreign equity shareholding in ICICI Ltd should not exceed 49 per cent...

MUMBAI, Aug 25: The finance ministry has stipulated that the total foreign equity shareholding in ICICI Ltd should not exceed 49 per cent. The total foreign shareholding in the term lending institution is currently below 49 per cent.

The government has in principle approved ICICI8217;s proposed 315 million international equity offerings. This is part of the overall issue size of Rs 2,165 crore 500 million which was approved by the ICICI board on August 19. ICICI plans to make a preferential allotment to its three principal domestic institutional shareholders as well as a public issue. It has fixed the price at Rs 73 a share of a face value of Rs 10.

ICICI has already announced its plans to enter the domestic equity market in the first week of September to mop up Rs 275 crore. The issue will be among the largest equity issues in the past one year, and the price has been fixed at Rs 73 per equity share of Rs 10 face value.

The financial institution has also announced that it will make a simultaneous preferential offer for Rs 500 crore to its principal domestic institutional shareholders 8211; Life Insurance Corporation, General Insurance Corporation and its subsidiaries and Unit Trust of India UTI at the same price of Rs 73, which will enable than to retain their percentage stake in ICICI to the present 33 per cent.

According to a press release issued after the board meeting held today, ICICI said that it will make a 320 million international offering which is likely to be through a American Depository Receipt ADR issue. quot;The pricing for the international offer would be determined on the basis of the bookbuilding process,quot; the release said. The institution will try to push for the international issue immediately after the completion of the public issue and the deadline is September 30.

Analysts said that ICICI will have a difficult time in raising money through the domestic retail issue, especially at a time when the outlook for banking sector stocks is not exactly bullish. quot;Software stocks might be doing well as the sector is on an upswing but the outlook for banking sector stocks is bearish,quot; an analyst in a leading foreign brokerage house said.

The ICICI stock was trading at Rs 72 on the Bombay Stock Exchange and closed at Rs 72.85 on Wednesday. quot;It is better to pick up the stock from the secondary market if the price keeps dipping,quot; another analyst in a local brokerage house said. The institution is yet to appoint merchant bankers for the retail issue apart from the lead manager, JM Morgan Stanley. The institution had submitted an umbrella prospectus for the bond issue with Sebi, it will not take a long time for the security watchdog to clear the issue. quot;Tentatively, we are planning it in the next two to three weeks,quot; a senior official in ICICI said.

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ICICI CEO and managing director Kamath had earlier said that both equity issues were a proactive move by ICICI to further strengthen its capital base in order to sustain accelerated growth and to capitalise on market opportunities.