ICICI investment in VC arm under lens

Reserve Bank of India (RBI) has taken a hardline approach to the country’s largest private bank ICICI’s investments in ICICI Venture — the country’ biggest private equity fund. The regulator feels that ICICI may be using its venture capital arm to make investments which could have been difficult from the bank’s books.

ICICI Venture is a subsidiary of ICICI Bank. Besides owning I-Venture, the bank also invests in some of the funds managed by the VC. Just as in mutual funds, a string of financial investors subscribe to such funds where the bank also joins in.

RBI has told ICICI Bank to include its investments in the VC in fulfilling the exposure limits that the bank has to stick to. Under prudential norms, the maximum exposure a bank can take to a company or a business group is linked to its capital. Earlier, banks used to float non-banking finance companies (NBFCs) to sidestep this regulation and lend to corporates.

Read more in The Economic Times article.

ICICI seeks non-banking finance company licence, drops FoF plan

ICICI Bank has applied for a licence to set up a non-banking finance company (NBFC), even as it has decided to stick to its knitting in other areas. The country’s second-largest bank has shelved plans to get into the fund of funds (FoF) business. It has also dropped the idea of setting up an infrastructure fund by itself.

Last year, the bank had made plans to foray into the FoF business. It was looking to start with around $500-million fund and then expand it to around $2.5 billion with multiple closing. However, with international markets going into a tizzy on the back of the subprime crisis, the bank has decided to shelve its FoF business plans. The bank was also looking at setting up a $2-billion infrastructure fund.

On the investor appetite for funds, ICICI Bank joint MD Chanda Kochhar said, “The demand for such funds continues to be strong, because infrastructure in India is still attracting a lot of interest and investors are long-term players who are not affected by short-term movements in the market.”

Some other players like Citi, Blackstone, 3i and Axis Bank have set up infrastructure funds to invest in India. On the FoF, she pointed, “We haven’t really finalised all plans there. In the current market scenario, it doesn’t make sense.” The FoFs are essentially investor groups that invest in private equity funds in order to provide investors with a low-risk product through exposure to a large number of vehicles across sectors and even geographies.

The bank has applied for a NBFC licence to RBI. If RBI approval comes through, it will be the second private sector bank after HDFC Bank to set up a NBFC. However, the plans have not been finalised. The group is also looking at using its housing finance company to book more home loans from this year.

ICICI Bank buys back $50 mln of bonds

ICICI Bank, India’s second biggest bank, said on Monday it had bought back and retired bonds with a face value of $50 million that were due to mature in 2012, its second such transaction in March.The bonds, which had a 5.75% coupon, were issued by the bank’s Bahrain branch.

On 8 March, it had said it has bought back and retired $50 million of bonds with a 6.625% coupon that were due to mature in 2012 and were also issued by its Bahrain branch.

HDFC to raise Rs 4,000 cr debt

Mortgage lender Housing Development Finance Corporation (HDFC) will be raising Rs 4,000 crore ($1 billion) debt to finance its stake purchase in HDFC Bank. The debt will be raised over a timeframe of 18 months.HDFC Bank recently announced the acquisition of Centurion Bank of Punjab in an all-stock deal. Following this, HDFC Bank announced a private placement of equity to HDFC to enable the mortgage lender to maintain its stake at the current level of 23.3 per cent. This entails an investment of almost $1 billion by HDFC, according to a sources.

The the possibility of an equity issue in the near future by HDFC has been ruled out and it would instead use the option of raising debt to finance its purchase.The merger paved the way for the creation of the country's largest private sector bank in terms of branch network. The combined entity will have a nationwide network of 1,148 branches. ICICI Bank has close to 955 branches.

SBI, ICICI buy 3% in Jaiprakash Power Ventures

State Bank of India (SBI) and ICICI Bank have together acquired 3% in Jaiprakash Power Ventures (JPVL), a wholly-owned subsidiary of Jaiprakash Associates (JAL), for Rs 400 crore in first of two private placements before its initial public offer (IPO).

This would be followed by another pre-IPO placement before the firm hits the market with a public offer, together raising Rs 3,500 crore.The company will dilute another 17% through the private placement and IPO.Of this, the pre-IPO deal is expected to be for about 3-4% of the equity, while the rest would be through the public offer. SBI and ICICI are supposed to have paid a little over Rs 230 per share.

JPVL is looking at a valuation of $5.5 billion, post-IPO. Following the IPO, the shareholding of Jaypee group in JPVL would come down to 80%.

Read more in The Economic Times article

ICICI Bank eyeing I-Sec IPO: Traders

India's most-valuable lender, ICICI Bank, may be planning an initial public offer in its investment banking and broking unit, traders and analysts said on Monday, sending its shares soaring more than 6 per cent.A spokesman for New York-listed ICICI said it was exploring various opportunities for its subsidiaries and that an announcement would be made if there was any decision.

The bank held a meeting for a group of investors on Monday, and traders said that was the source of the IPO talk in ICICI Securities, which lifted the stock from a 3.9 per cent early fall to end up 6.1 percent at a record close of Rs 1,363.90 ($34.7).

ICICI Securities offers services in corporate finance, fixed income and equities and operates out of Mumbai with offices in New Delhi, Chennai, Kolkata, New York, London and Singapore, according to its Web site. It also has a subsidiary in the United States which is a member of the National Association of Securities Dealers Inc and is registered with authorities in the United Kingdom and Singapore to offer corporate advisory services.

Read more in The Economic Times article.

ICICI arm plans Jaypee stake buy

ICICI Venture Funds Management Co. Ltd, the private equity arm of ICICI Bank Ltd, India’s second biggest lender, is planning to invest about $800 million (Rs3,148 crore) to pick up a stake in Jaypee Infratech Ltd, a unit of the cement-to-construction conglomerate Jaypee Group, said a person familiar with the matter.The size of the proposed stake could not be ascertained. Jaiprakash Associates and ICICI Venture declined to comment.

Jaypee Infratech is a fully-owned unit of the Jaypee Group and was floated to implement the Taj Expressway project, a 165km highway connecting the cities of Noida and Agra in Uttar Pradesh along the banks of the Yamuna river. The company has also got the right to develop 25 million sq. m of land along the expressway, according to annual report of group company Jaiprakash Associates Ltd, which won the rights to build the road. The rights will be transferred to Jaypee Infra-tech, the report said.

Read more in The Livemint article.

UBS, ICICI offload Deccan Aviation stake

UBS Securities, ICICI Ventures and ICICI Bank today sold a part of their shareholding in Deccan Aviation, owner of the low-cost Air Deccan airline.In a series of bulk deals, Money Matters bought all the shares sold by the three entities for nearly Rs 102 crore.

While UBS Securities sold 1.79 per cent stake, ICICI Ventures offloaded 2.31 per cent stake. ICICI Ventures holds shares in Air Deccan through Western India Trustees and Executor Company. ICICI Bank sold 0.91 per cent stake.Prior to the sell-of ICICI Ventures held 6.78 per cent stake, UBS had 2.53 per cent and ICICI Bank 1.05 per cent.

ICICI Bank and UBS sold the Deccan shares at Rs 150 each, and ICICI Ventures sold the shares at Rs 149.96 each.ICICI got Rs 46.9 crore from the sale, UBS got Rs 36.5 crore and ICICI Bank Rs 18.6 crore.

The sale has happened at a time when Vijay Mallya’s UB Group is scaling up its shareholding in Deccan Aviation through a 20 per cent open offer. Priced at Rs 155 a share, the offer was triggered with the Kingfisher group acquiring a 26 per cent stake in the airline. The offer will close on October 1.

Private equity firms invest record $3.8 bn in India

Global private equity firms, including Blackstone and Carlyle Group, have made an investment of $3.8 billion in 2007 so far in the country, up 50 per cent from the year-ago period.

The record volume has been reached through 81 M&A deals. Last year, foreign private equity players had invested $2.6 billion, data complied by global consulting firm Dealogic showed.

Carlyle Group is the leading "financial sponsor" in India with investment of $777 million via two deals, including acquisition of over six per cent stake in HDFC.

It is followed by Dubai International Capital, which acquired a 2.87 per cent stake in ICICI Bank for $741 million, and Blackstone Group with $619 million inflow via eight deals.

Blackstone Group, the world's leading private equity firm, has acquired stake in companies such as Intelenet Global Services, Punj Lloyd and Gokaldas Exports.

The US-based Group has also decided to pump in $150 million to acquire a stake in Nagarjuna Construction Company. A move that comes close on the heels of its decision to acquire up to 70.1 per cent stake in Gokaldas Exports, the country's biggest apparel exporter, for about Rs 675 crore.

Blackstone Group manages around $90 billion of assets worldwide. In January, it invested about $275 million in Ushodaya Enterprises Ltd (UEL), a media and film production company owned by Ramoji Rao.

Fin Tech buys 1% NSE stake for Rs 125cr

Software firm Financial Technologies India has acquired 4,50,000 shares (1%) stake in National Stock Exchange from ICICI Bank for Rs 125 crore.According to a release issued by Financial Technologies to the BSE today, the company joins other NSE shareholders including the New York Stock Exchange (NSE), Goldman Sachs, ICICI, SBI, IDBI, LIC and various public sector banks.

NYSE and three financial investors — General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund — had picked up 5% stake each in NSE for $490 million (Rs 2,205 crore) in January this year.That had pegged the upper-end valuation of the country’s largest bourse at $2.5 billion (Rs 11,250 crore). NSE had recorded a net profit of Rs 191 crore on a revenue of Rs 472 crore for the financial year ended March 31, 2006.
With the current FT-ICICI Bank deal, the valuation of NSE has moved up to Rs 12,500 crore - an increase of around 11% in seven months.

ICICI raises Rs 1,294 cr via green-shoe option

ICICI Bank has raised Rs 1,294 crore through its green-shoe option in the local market. The bank had raised Rs 8,750 crore through its local issue and an equal amount through its overseas issuance, too.

The bank was looking at a green-shoe option of Rs 1,312.5 crore. These shares were also meant to be used for stabilisation purposes, to stabilise the shares in the market.

However, the bank has used only around Rs 18.5 crore for stabilising its shares. The bank had earlier priced its local issue at Rs 940. However, for retail shareholders, the bank had given a discount of Rs 50 per share.

The share price of the bank in the past two weeks has fallen much below the issue price. It closed on Tuesday at Rs 877.65. In the overseas market, the bank had priced its ADS at $49.25 or Rs 1,002.5 per share. The ADR price is currently at $43.

Ess Dee Aluminium Sells 5% To Morgan Stanley For Rs 81 Crore

It has been a remarkable journey for Ess Dee Aluminium, an aluminium foil-based packaging company for pharma businesses, from Rs 1 lakh turnover in 1991 to Rs 1,600 crore valuation in 2007. The company has just raised Rs 81 crore by diluting 5 per cent stake to Morgan Stanley. This was a company which analysts urged investors to avoid when it came up with an IPO in December last year.

Ess Dee Aluminium on Wednesday informed Bombay Stock Exchange that it would issue 1.41 million equity shares of Rs 10 face value on a preferential basis to Morgan Stanley at Rs 575 a share. That makes the deal worth Rs 81.07 crore or $18 million, valuing the company at $360 million. Interestingly, in March 2007, foreign fund Fidelity had picked up 5.21 per cent stake in the company for about Rs 40 crore, at just half of the current valuation.

It also has other biggies as investors - ICICI and Marc Faber who hold around 3.5 per cent and 4 per cent equity, respectively, besides Volrado Venture Partners (6.06 per cent) and Deutsche Securities Mauritius Ltd (2.11 per cent). Morgan Stanley's investment in Ess Dee comes at a time when it was also reportedly in talks to buy out the Vedanta Resources unit India Foils.

The story of Ess Dee, set up by Sudip Dutta (he apparently bought the sick unit from his employers), has its beginnings from a small scale unit in Jogeshwari in Mumbai with 12 employees in 1991. It started with manufacturing pouches and sachets and had its first year sales of just Rs 1 lakh. In 1994, they were appointed as one of the distributors for Indian Aluminium Company Ltd (INDAL). But the breakthrough came in 1994, when it acquired a sick aluminium foil printing unit in Goregaon on a rental basis, after which it entered the pharmaceutical packaging and printing market. It hasn't looked back ever since.

ICICI to raise $1.5 bn in loans

ICICI Ltd is raising $1.5 billion via a yen-denominated loan-the country's biggest offshore loan for a financial borrower, sources familiar with the deal said.

The loan has three equal-sized maturity buckets to fund general corporate purposes. The five-year portion is the longest maturing loan to be issued by ICICI. ICICI, already Asia's biggest issuer outside of Japan in the offshore bond market this year, is trying to feed fast-growing India's frenzied loan market as deposit growth struggles to keep pace.

Lending by Indian banks is growing at an annual pace of 29 per cent, but deposit growth is a more modest 20 per cent. The issue is being arranged by Bayern LB, BNP Paribas, Calyon, Commerzbank, Goldman Sachs, HSBC, Intesa Sanpaolo, Natixis, Standard Chartered Bank and Sumitomo Mitsui Banking Corp.

The 364-day tranche will pay 15 basis points (bps) over the one-year London Interbank Offered Rate (LIBOR); the three-year tranche will pay 38 bps over LIBOR; and, the five-year tranche will pay 55 bps over LIBOR.

The bank plans to complete the syndication of the loan by the first week of September. ICICI's offshore senior debt is rated BBB-minus by Standard & Poor's Ratings Services.

Nasscom Plans $25 Million Angel Fund

The trade body for Indian IT software and services industry, Nasscom, plans an India Innovation Fund which will provide angel funding to technology start-ups, says a report. The fund will have an initial corpus of Rs 100 crore ($25 million), which could be increased to Rs 150-200 crore ($37.5-50 million) in the next two years.
Nasscom plans to set up the fund through a public-private partnership. It will be managed by professional fund managers, while the government's role will be limited (why government at all when Nasscom can do it alone?). Apparently the fund will allow private investors to acquire stakes in the professionally-managed PPP fund.

Kiran Karnik, president, Nasscom, has been quoted as saying: "We want this fund to concentrate on start-up firms focusing on innovating technologies. We are not looking at stage-B funding for somebody who is already established and looking at further growth."The fund will be raised from contributions from across the industry, financial institutions and companies. Karnik said Nasscom is talking to institutions like ICICI too.

A Boston Consulting Group-Nasscom report on innovation - Indian Innovation Report 2007 - said by focusing on innovations, Indian IT/ITeS firms could target a potential revenue of $175 billion by 2012 against the projected revenue of $124 billion. The industry had registered revenues of $39.6 billion last year.

Read more in The Business Standard article.

ICICI may offer stake in holding company

With the government yet to approve foreign holding in ICICI Financial Services, ICICI Bank may look at options to rope in domestic investors in the holding company. An application for offering a slice of the holding company’s equity to overseas investors is stuck with the Foreign Investment Promotion Board (FIPB).

Sources said the bank had sensed interest among local institutional proprietary investors in the holding company. The bank had applied to the FIPB to get 24% foreign investment in ICICI Financial. It is also looking at listing this entity in the future. ICICI Bank had also received firm commitments of Rs 2,650 crore ($650 million) for a 5.9% stake in ICICI Financial. This put the holding company’s valuation at $10.94 billion. The investors, who have agreed to pick up stakes, include Goldman Sachs, Swiss Re and Nomura, along with two more overseas investors. Of this, Goldman Sachs has agreed to pick up a 2.02% stake. Over 70% of the value of ICICI Holdings is expected to come on account of ICICI Prudential — the largest private life insurance company in India. Although it’s yet to show profits, the high growth in the insurancebusiness and a 7% market share have helped in the valuation of the holding company. The holding company will own ICICI Bank’s stake in insurance and mutual fund JVs.

Read more in The Economic Times article.

Vijaya Bank to raise Rs 2K cr via bonds

Vijaya Bank plans to raise Rs 2 billion through a bond sale, which opens on Friday, a merchant banker associated with the issue, said.

Following are the terms and conditions of the issue Borrower Vijaya Bank Coupon 9.50 per cent, payable annually Maturity 10 years Issue amount 2 billion rupees Opening date July 20 Closing date July 25 Arrangers UTI Bank, A.K Capital Services, SPA Merchant Bankers, ICICI Securities, ICICI Bank, Citigroup.

Dubai firm buys 2.87% stake in ICICI Bank

Dubai International Capital (DIC), the investment arm of Dubai Holding, has bought 2.87% stake in ICICI Bank, the country's second largest bank.The Dubai firm may have paid $717 million for the stake acquired via an American depository receipts (ADR) issue open to foreign investors.

Dubai International Capital's investment in the Indian bank follows its recent purchase of 3.12% stake in European Aeronautic Defence and Space Company EADS, the parent company of aircraft manufacturer Airbus.

Singapore government investors held about 9.7% stake in ICICI before the latest share offering and had the approval to raise their stakes substantially.DIC aims to have assets worth $25 billion in the next two years.

ICICI Bank seeks $1.5 bn in biggest borrowing

ICICI Bank Ltd, which raised $5 billion last month in India's biggest share sale, is borrowing a record $1.5 billion to fund growth in demand for credit, said Chief Financial Officer Vishakha Mulye.

ICICI is seeking the biggest loan by an Indian bank to meet credit expansion of as much as 30 per cent in the fastest-growing major economy after China. The amount is almost twice the syndicated borrowings of Indian banks this year and shy of the $1.86 billion total loans Mumbai-based ICICI took out in 2006.

The loan will take the amount of money ICICI has raised this year to $10.5 billion, enabling it to boost lending to Indian companies and its swelling middle class. The bank has sold $4 billion of bonds this year.

ICICI's borrowing ``is required to feed the growing demand for loans in the country,'' said Sudhindra Ballal who helps manage $150 million of Asian assets, including Indian equities, at Daiwa Asset Management in Singapore. ``There is a lot of potential.''

IDFC selling shares to mop up $500 mn

Infrastructure Development Finance Co. (IDFC), India’s biggest financier of public works, is selling $500 million (Rs2,050 crore) of shares to institutional investors, three people with knowledge of the matter said.

The sale, which began on Monday, will close on Wednesday and shares will be priced on 5 July, said the people, who declined to be identified before an announcement. The shares are being sold by auction or through book building, the people said.

“Several infrastructure projects will need large investments as India aims to increase its growth rate,” said R.K. Gupta, who manages Rs350 crore at Credit Capital Asset Management in Delhi and owns IDFC shares.

IDFC’s share sale follows a $5 billion offering by ICICI Bank Ltd, India’s biggest by market value, in June. The Mumbai-based company is raising money to meet demand for funds to build roads, ports and power plants in the world’s fastest growing major economy after China.

Citigroup Inc. and UBS AG are helping the lender sell the shares to banks, mutual funds, insurance companies and other big investors, according to a filing with the National Stock Exchange.JM Financial Consultants Ltd and Kotak Mahindra Capital Co. are also involved in the sale, the filing said.

Read more in The Livemint article.

ICICI Bank, Sterlite mop up $4 bn from US in a week

Two Indian companies, including the country's largest private lender ICICI Bank, have raised over four billion dollars last week from the US market.ICICI Bank, in the biggest offering by an Indian company, raised $4.3 billion in a global follow-on issue, half of which was in the form of American Depository Shares.

The ADS issue of 42.14 billion, including a green shoe option of $0.32 billion, was priced at $49.25 each, translating into a price of about Rs 1,002.5 per equity share and representing a premium of about 6.6 per cent over the domestic issue price.Each ADS represents two equity shares of the Bank.

Earlier, Vedanta group's Sterlite Industries, a non-ferrous metal and mining firm, raised $1.75 billion through an initial public offering on the NYSE.Each ADS represents one equity share of the firm and the were priced at $13.44 each.

Combining ICICI Bank's 42.46 billion offer and 41.75 billion of Sterlite Industries India Ltd, the two firms have mopped up over four billion dollars from the US market.