A stock broker reacts at a brokerage in Mumbai (Photographer: Prashanth Vishwanathan/Bloomberg News)

ICICI Securities Reduces IPO Size After Failing To Enthuse Wealthy Investors

India’s largest stock broker ICICI Securities Ltd. reduced the size of its initial public offering after shares set aside for high net-worth and retail investors were not fully subscribed at a time when stocks remain choppy.

Nearly 88 percent of the offer was subscribed after the IPO window was extended till 8 p.m. today for retail investors, according last data available on the NSE website. “The company has successfully closed its proposed offer for sale and raised approximately around Rs. 3,500 crore,” ICICI Securities said in a statement late on Monday.

The anchor book, about 60 percent of the shares set aside for large institutional investors, was subscribed ahead of the IPO. The non-anchor institutional book was subscribed 1.04 times while only 36 percent of the shares set aside for the high net worth individuals were sold. Retail investors’ portion was subscribed 88 percent and the shareholders’ allocation was subscribed 34 percent.

Offer for sale rules allow an issuerto close the issue as long as the company is able to dilute 10 percent of the paid-up capital. ICICI Bank’s inability to sell all the shares it planned comes as the benchmark Nifty Index has fallen so far this year, with most of the losses coming after January. Its broking arm derives about 90 percent of its brokerage revenue from the retail business. The company, according to its draft prospectus, managed more than 90 equity offerings raising over Rs 1 lakh crore in the last five years.

Parent ICICI Bank initially planned to raise up to Rs 4,017 crore by selling up to 7.71 crore shares, or 24 percent stake, in the three-day offer at Rs 519-520 apiece, valuing the company at Rs 16,751 crore. That’s lower than the initially targeted Rs 25,000 crore at the time of filing its draft red herring prospectus.

Of the shares on offer, 5 percent of the shares were reserved for ICICI Bank employees, 9.5 percent for retail investors and the rest for institutional investors. The lender would have continued to hold 76 percent stake in the company after the issue.

This will be the third issue from the ICICI Group in three years—after Rs 6,000-crore ICICI Prudential Life Insurance and Rs 5,700-crore ICICI Lombard General Insurance IPOs.

SBI Caps, Bank of America Merrill Lynch, Citigroup, IIFL, CLSA and Edelweiss are managing the issue, according to the prospectus.