ICICI Bank of India has raised $4.3bn from its combined offering of domestic common shares and American Depository Receipts and secured its place in the record books as having completed the largest ever equity fund raising by an Indian corporate, reports FinanceAsia.com.
The deal surpasses India’s largest domestic IPO, the $2.25bn float of real estate developer DLF, completed last week, and, if the 15 per cent greenshoe is also exercised, ICICI’s offering will stand at $4.93bn - more than twice the size of India’s second largest follow-on, which according to Dealogic data was Oil & Natural Gas Corp’s (ONGC) $2.36bn offering in March 2004.
The FT’s Joe Leahy, writing from Mumbai, says the evolution of Indian business onto the world stage is “now entering a new phase” which is “seismic in its significance”. Leahy notes that ICICI’s strong performance was matched last Tuesday by Sterlite Industries, a mining company owned by UK-based Vedanta Resources. Its $1.75bn ADR issue, the largest new listing in New York by an Indian company, soared on its debut on Tuesday.
And there are many more such blockbuster listings in the offing, he adds, including a mooted $2.9bn offering by Emaar MGF, an Indian and Dubai joint venture property developer, and a $1bn follow-on offering by HDFC, the country’s number two private bank.
These listings may not yet be anywhere near the league of China - where Industrial & Commercial Bank of China’s $22bn IPO last year was the world’s biggest offering, he says. “But some of the same dynamics are at work”.
“In China’s case, the government sees the listing process as a way of transforming the management practices of its state-owned enterprises and providing them with a platform to raise future capital.
“In India, where the private sector already follows market principles, the listings are aimed more at preparing companies for the enormous investments needed to keep pace with India’s economic growth.”
FinanceAsia.com looks at the dynamics of ICICI’s deal, and how it was split virtually equally between the domestic and international offerings, both of which saw very strong demand. “Not surprisingly given that the ADR trades at a premium to the underlying shares in India, the pricing of the ADRs was tighter than for the domestic offering and came at a 6.6 per cent premium to the pricing of the domestic offering”, says FinanceAsia.
“This explains why foreign investors alone subscribed for about 12 times the shares available to all qualified institutional buyers (QIB) on the domestic offering. However, the final allocation will be capped as 26 per cent of the deal needs to go to domestic investors to ensure ICICI doesn’t break its 74 per cent foreign ownership limit, which is already pretty much filled,” it notes.
Your Ads At Here
