Domestic broking and investment banking major ICICI Securities has sought the Securities and Exchange Board of India’s (Sebi’s) permission to manage its own share sale. This is the first time an investment bank is considering managing its own initial public offering (IPO), said industry players.
Sources said the capital markets regulator was currently looking at the “unique request” and might revert in a few weeks.
“There is no such precedence. Sebi will check if allowing ICICI Securities to handle its own IPO will result in any conflict of interest. If the regulator is convinced that it will not put at risk the interests of public shareholders, it may give its nod,” said a legal expert.
ICICI Securities, an arm of private sector ICICI Bank, has already set in motion the plan to launch an IPO, which could value the firm at Rs 25,000 crore.
Sources close to Sebi said the regulator might not allow ICICI Securities to conduct its own due diligence, but might let it act as a co-book running lead manager only for the purpose of marketing the IPO.
An investment bank’s functions include conducting due diligence of the IPO-bound company, coordinating with Sebi for approvals, setting the price and conducting roadshows to attract investors.
In similar instances, Sebi had allowed ICICI Securities to work on the IPOs of affiliate companies ICICI Lombard and ICICI Prudential Life. However, there too, the due diligence work was assigned to other non-related investment banks.
“Sebi had allowed ICICI Securities to take up the mandate of ICICI Lombard and ICICI Prudential Life. However, they were still group firms. In this case, it is handling its own IPO. The regulator might want to take a careful look at this issue,” said a legal expert.
An email sent to ICICI Securities on the issue went unanswered.
Last week, Bloomberg reported ICICI Securities had hired Bank of America Merrill Lynch, Citigroup, Citic CLSA, Edelweiss, and IIFL Holdings for its Rs 2,000-Rs 3,000 crore IPO. Sebi’s nod will allow ICICI Securities to add its own name to the list. It is typical for six to eight banks to offer on a single IPO.
ICICI Securities could be keen on marketing its own IPO to leverage its institutional and retail investor base. The investment bank is one of the major players when it comes to domestic equity fundraising. According to Bloomberg IPO league table data, ICICI Securities is ranked fifth this year having handled eight issues. Last year, it was ranked second having bagged 11 IPOs.
Industry players say globally it is a common practice for investment banks to work on their own share sales. Earlier this year, Deutsche Bank was one of the banks for its $8.6-billion rights offering.