Sebi Clearance For Rs 3000-Cr Icici Umbrella Bond Issue

The Securities & Exchange Board of India (Sebi) has given an in-principle approval for the Industrial Credit and Investment Corporation of Indias (ICICI) Rs 3,000-crore umbrella bond issue.

Kalpana Morparia, general manager, ICICI said the issue had been given in principle clearance.

Sebi will make a few minor changes in the mother prospectus after which the institution will be allowed to tap the market.

The merchant bankers of the issue will be fixed as and when ICICI taps the market. However, the lead manager has been mandated as J M Financial.

The Rs 3000 crore issue has a 100 per cent greenshoe option and ICICI can raise funds as and when required. This reduces the lead time for ICICI to tap the market at any point of time and help it take advantage of the liquidity and interest rate scenario.

 

An executive director at Industrial Development Bank of India (IDBI) said the umbrella clearance will help prevent what happened to IDBIs Rs 750-crore issue that closed for subscription yesterday.

The liquidity was tightened after the issue was announced and IDBI had to hike rates just before the opening date. This is due to the long lead time between deciding to float an issue and the actual date on which the issue opens.

ICICI is planning to offer seven instruments as part of the umbrella bond issue. The instruments include the regular income bonds, money multiplier/deep discount bonds, tax-saving bonds, index bonds, encash bonds, twin benefit bonds and monthly pension bonds.

The institution will also become the first entity in India to issue a monthly pension bond.

The Sebi clearance is expected to set a precedent for other development financial institutions like IDBI and the Industrial Finance Corpor-ation of India (IFCI) and will also boost their resource mobilisation plans, a source said.

Early this month, Sebi had already decided to grant permission for shelf registration to development financial institutions to enable them to enter the capital market with bond offerings any number of times in a year without seeking the Sebi clearance each time.

Having obtained the Sebi clearance, ICICI will be able to raise funds up to Rs 3,000 crore through either one bond or in tranches as and when the funds are required. The bonds will be issued at interest rates that will have to be specified before the issue. Much will, however, depend on the prevailing market conditions.

The mother prospect contains company details as well as product details. While details on the company is likely to remain unchanged, product details will vary depending on the nature of the instrument to be issued.

However, the financial institution will have to inform Sebi of any material changes in the company other than what has already been approved. Sebi, of course, reserves the right to give its observation on the material changes in the company. In case, Sebi makes an observation on the changes, it will have to be incorporated in the prospectus before entering the market again, the source added.