Global financial institutions such as Goldman Sachs, Morgan Stanley, JP Morgan, Credit Suisse and Nomura among others are in the race to acquire a minority stake in ICICI Securities (I-Sec) — the broking arm of ICICI Bank — in a pre-initial public offering placement of equity.
| source close to the development said they have shortlisted close to 12-15 expressions of interest from these institutions and the deal is likely to be sealed shortly. |
| JP Morgan is the advisor for the pre-IPO placement. However, merchant bankers for the IPO are yet to be finalised. Sources added that 3-5 per cent will be placed with institutional investors ahead of the proposed IPO of ICICI Securities and the rest 5-7 per cent will be sold to the public through a share sale. |
| ICICI Bank is looking at selling about 10-12 per cent of its equity in the broking firm. Sources said ICICI Securities has been valued at $7.5 billion (around 30,000 crore). |
| This means a 10-12 per cent equity sale will fetch it around Rs 3,000-3,600 crore. This would be the highest valuation commanded by an investment bank in India. |
| Early this year, the bank’s board approved the listing of ICICI Securities. The other five unlisted subsidiaries of the bank are ICICI Ventures, Prudential ICICI AMC, ICICI Prudential Life Insurance, ICICI Lombard General Insurance and ICICI Securities Primary Dealership. |
| I-Sec has a thriving investment banking business, besides institutional and retail broking activities. ICICIdirect.com is one of the largest online brokerages in the country with over 1.3 million customers. |
| In February 2007, JM Financial had sold its 49 per cent stake in JM Morgan Stanley Securities for $445 million. The deal valued the entity at $908 million against DSP Merrill Lynch’s valuation of $1 billion, when Merrill bought out Hemendra Kothari’s 47 per cent stake in December 2005. |
| ICICI Securities $7.5 billion valuation puts the investment bank on the top of all these firms. |
| Also in the recent past domestic brokerage houses such as Edelweiss, Motilal Oswal and Religare had seen a phenomenal debut on the bourses. |
Source: Business Standard