ICICI plans to raise ₹20,000 cr via QIP
ICICI BANK HAS APPROACHED AT LEAST 10 INVESTMENT BANKS ON THE PROPOSED CAPITAL RAISING
MUMBAI: ICICI Bank Ltd plans to raise at least ₹20,000 crore by selling shares to institutional investors, in the biggest such capital raising in India, as the nation’s largest private lender looks to expand lending and compete with rivals to fill in the void left by shadow lenders after a crisis engulfed the sector.
The Mumbai-based bank has approached at least 10 investment banks on the proposed qualified institutional placement (QIP) of shares, and it may soon give a formal mandate to some of them, two people familiar with the bank’s plans said on condition of anonymity.
“The bank may sell a 6-7% equity stake. The plan is to raise the entire money in a single tranche. At one point, the plan was to raise the money through issuance of ADRS (American depositary receipts) but now as the market seems to be stabilizing, the plan is to raise the capital in India,” said one of the two people.
Bolstering capital base will help ICICI Bank support loan growth at a time non-bank financiers are finding it difficult to raise funds because of a crisis of confidence triggered by the unexpected payment defaults by Infrastructure Leasing and Financial Services (IL&FS) last year.
The r esulti ng l i quidity squeeze has given banks the opportunity to win back market share they had lost to non-banks earlier. “Banks have been keen on raising working capital, especially to be able to capture the lending market in the infrastructure sector that has been vacated by NBFCS,” a Mumbai-based banking analyst said on condition of anonymity.
“The market is ripe and has enough appetite for such a placement, and if the bank is able to raise this money, they should use the opportunity to do so and use the capital in phases.”
An ICICI Bank spokesperson denied that the lender is in the process of raising capital.
On October 26, ICICI Bank reported a 28% drop in net profit to ₹655 crore for the September quarter.
Its asset quality improved in the September quarter with gross non-performing assets (NPAS) at 6.37% compared with 6.49% in June quarter and 8.54% in the year-ago period. The bank’s net NPA also improved to 1.6% as against 1.77% in Q1FY20.
Several private sector lenders, too, are in the process of augmenting growth capital. Yes Bank Ltd recently announced plans to raise $1.2 billion within this fiscal. A 22 September Mint report said Axis Bank Ltd has raised ₹12,500 crore in India’s second-largest QIP. In July, the bank’s board had approved a proposal to raise up to ₹18,000 crore through an issue of equity shares, depository receipts, or convertible securities. In 2017, SBI had raised ₹15,000 crore in the country’s largest QIP till then.