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Apply for ICICI Bank issue at cut off price: Experts
India's second largest bank, ICICI Bank, is planning to raise around Rs 8,750 crore through follow on public issue. The issue will be open for bidding through the book building route from June 19, 2007 to June 22, 2007.
India's second largest bank, ICICI Bank , is planning to raise around Rs 8,750 crore through follow on public issue. The issue will be open for bidding through the book building route from June 19, 2007 to June 22, 2007.
Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Majority of the experts said apply.
Experts/Company
Poll Result
Experts view
R S Iyer
(KR Choksey)
Apply
In case of retail investors, those who are really interested in the ICICI Bank issue for short term, they should apply for 108 shares at cut off price i.e. payment method I. There are strong chances that the stock price will be maintained at around Rs 950 level. Majority of the buying from institutionals has been at the higher price of the band of Rs 950. Long term investors can go for payment method second, in which they can make payment in part i.e. Rs 250 on application, Rs 250 on allotment and balance within six months.
Manish Bhatt
(Prabhudas Lilladher)
Apply
ICICI Bank is a very good issue for retail investors as they have provided part payment system (Rs 250 at the time of application, Rs 250 on allotment and balance within six months from allotment) for retailers and for institutional as well. Investors can subscribe to the issue and hold for long term.
SP Tulsian
(Investment Advisor)
Don't Apply
ICICI Bank is an aggressively priced issue. Their price discovery mechanism is not good. Investors should not apply for this issue. If the bank decides issue price at Rs 950, then retailers get benefit of Rs 50 that is buying price will be Rs 900. If the stock slips below Rs 900 during listing then that will be bad for investors.
Up to 5% of the issue, or Rs 437.5 crore, is reserved for existing retail shareholders of the bank (i.e. shareholders holding up to 108 shares of the bank as of June 13, 2007). The issue has a green shoe option of Rs 1,312.5 crore.
The price band for the issue has been fixed at Rs 885 to Rs 950 per equity share. Retail bidders, including existing retail shareholders, will be allotted shares at a discount of Rs 50 per share to the issue price determined through the book-building process. The minimum bid size will be six equity shares for retail bidders and existing retail shareholders. Bids should be in multiples of six equity shares for all bidders.
Under payment method-1, retail bidders are required to pay Rs 250 per share on application, Rs 250 per share on allotment and the balance amount on a call which is to be issued by the bank within a period of six months from the date of allotment, and the discount would be adjusted against the call amount. Under payment method-2, retail bidders are required to pay the full bid amount less the discount, at the time of application.
Non-institutional bidders have the option to pay Rs 250 on application and the balance on allotment. Qualified institutional bidders (QIBs), who have to pay 10% of the bid amount at the time of application, have the option to pay Rs 250 less the margin amount on confirmation of allocation and the balance on allotment.
Non-eesident bidders (including FIIs) will require prior approval of the Reserve Bank of India to subscribe to partly paid shares.
