ICICI share sale well covered, pricing seen high

India's second-largest lender ICICI Bank is set to price its $4.9 billion share sale at the top end of the range after the local order book was filled more than 11 times, bankers said.
Demand for the country's biggest ever share sale was boosted by a significant bid from Singapore's Temasek Holdings and private equity firm Warburg Pincus, but retail interest was less strong. The retail issue attracted bids of less than a quarter of the stock on offer, a person close to the offer said on Friday.
By close of the Indian part of the sale, the $2.1 billion worth of ICICI shares on offer to domestic investors had bids for 1.12 billion shares against 98.9 million available, data posted on the National Stock Exchange's website www.nseindia.com showed.
ICICI, which is offering a similar stake to US investors, had set an indicative price band of 885 to 950 rupees a share, with retail investors getting a discount of 50 rupees to the final price fixed after the issue closes. The company is selling 19 to 20 percent of its expanded share capital to fund loan growth while maintaining its capital adequacy ratio.
"There's a lot of demand, so they can price it at the top end of the band," a banker familiar with the issue said. "But if they want to leave something on the table, it could be slightly below the top."
Macquarie Securities, too, said in a report: "Given the strong subscription demand, we believe the final pricing of the issue will be at the higher end of the price band."
The private sector lender is a pace-setter in India's often creaky financial sector and most bids were from institutional investors betting on India's consumption-led growth story. The institutional portion, where ICICI wants to raise 41.56 billion rupees, had been bid more than 10 times, another banker said.
ICICI, which is also listed in New York is offering up to $2.1 billion worth of shares to US investors in American Depository Receipts. The offer will close later on Friday and pricing was expected after that, the banker said, adding the US portion could be covered four to five times.
A 15 percent overallotment option is expected to be exercised, which could push the final size of the fundraising to $4.9 billion. Analysts said the poor retail response was not surprising as Indian retail investors often shun stocks with high per-share prices.
"Retail participation is always low in high value stocks as it is beyond the reach of most retail investors," said S. Amarnath, regional head at Religare Securities. However retail bids tended to come in at the last minute, so take-up could improve. Even if the 29.09 billion rupee retail portion was uncovered, it could be allotted to funds.
Last week property developer DLF Ltd raised $2.25 billion in India's biggest initial public offering, but the retail response there was also muted. With assets of more than $79 billion second only to government-run State Bank of India ICICI built its business by aggressively chasing consumer loans when India opened its economy in the 1990s and spurred rapid economic growth.
ICICI shares, which fell nearly 10 percent to a low of 844.10 rupees after the share sale announcement earlier this year, ended 0.4 percent up at 953.75 rupees in a flat Mumbai market.
Once completed, the sale will surpass the $2.3 billion raised by state-run Oil & Natural Gas Corp in 2004. The issue is lead-managed by Goldman Sachs Merrill Lynch and J.P. Morgan at the global level, joined by JM Financial and Enam Financial Consultants in the domestic sale.