ICICI Bank Limited is entering Indian primary market with a Public issue of * equity shares. Below are the salient features of this issue:
Business of the Company
ICICI Bank Limited is a household name in India. Incorporated in 1994, it is currently the largest private sector bank and the second largest bank in India in terms of assets. Company is a leading name in both corporate and retail banking. It has a total of 710 branches, 45 extension counters and 3,271 ATMs. The bank has approximately 24.0 million retail customer accounts. Their corporate customers include India’s leading companies as well as growth-oriented small and middle market businesses.
Promoters
The company has no identifiable promoters. Nearly 25% of total capital is in form of ADS. There are a total of 113.73 million outstanding ADSs. Life Insurance Corporation of India has nearly 7.8 percent of equity. Surprisingly, Bajaj Auto Ltd. has nearly 4% of equity shares of the bank. The bank is however professionally managed.
Financials
ICICI Bank Ltd. is a consistent profit making company. For the FY ended March 31, 2007, the company clocked a total interest income of Rs. 230 billion rupees. The net interest income for the same period was about Rs. 66.36 billion and total income was about Rs.125.65 billion. The PAT for the year was Rs.31.10 billion. For FY 2006, company had clocked a turnover of Rs.88.90 billion and a net profit of Rs.25.4 billion. For both the above periods, corresponding diluted EPS was Rs.34.64 and Rs. 32.49 respectively.
Particulars of the Issue
The issue is for * equity shares of Rs.10 each for cash at a price of Rs.* per share aggregating to Rs.* crores. The issue will constitute about * of fully diluted post paid up equity capital.
Basis for Issue price
ICICI Bank Ltd. is India’s largest private sector bank, and the second largest bank in India in terms of total assets. At May 10, 2007 the bank had the largest market capitalization among all banks in India. Its subsidiaries in life and non-life insurance have achieved leadership positions among private sector life and non-life insurance companies. Its Net NPA Ratio was 0.98% at March 31, 2007. Its advances increased 34% to Rs. 1,958.66 billion at March 31, 2007
Objects of the Issue
Main object of this issue by the bank is to augment its capital base to meet future capital adequacy requirements arising out of growth in its businesses and for other general corporate purposes. Other general corporate purposes will include development of channel infrastructure to support business growth and service customers in a better way.
Risks
Following are the key risks which can impact company’s performance:
a. Volatility in interest rates could adversely affect net interest margin, the value of fixed income portfolio, income from treasury operations, the quality of loan portfolio and financial performance.
b. Like for any other bank, level of non-performing assets remains as a major risk.
c. Decrease in value of collateral is a potential risk for the bank.
d. Reorganization of holdings in insurance and asset management subsidiaries remains a challenge for the bank.
e. Foreign exchange rates fluctuations can affect the company.
f. Government policies also have major impact on the company’s business.
* indicate that information is yet to be declared by the company.
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