ICICI Securities Limited which had tapped the capital markets with its offer for sale of 7.72 cr shares in a price band of Rs 519-520 received poor response and was therefore forced to prune the size of offering. Call it an irony but grapevine has it that the rush of the IPO was to save on the long-term tax which would be applicable with effect from 1st April 2018. Whether they would be able to save on the same or not is still debatable, the pruning of the issue by Rs 500 crs more than makes up for the estimated loss that the government coffers would have had.

The DRHP filed in December 2017 had an issue size of 6.44 cr shares which was increased to 7.72 crs in the RHP of March 2018. This clearly shows that the valuation which ICICI Bank was expecting from the market for its subsidiary ICICI Securities Limited has been reduced significantly.

Secondly the brand ICICI Securities Limited has a triple offering in bank, demat and trading account on a highly successful digital platform ICICI Direct.Com. This platform as claimed by the company has 3.9 million operational accounts. Assuming a mere 10% of these account holders chose to subscribe to a minimum lot of 28 shares in the issue of ICICI Securities Limited we are talking of 109.20 lakh shares which would be 1.48 times the Retail bucket.

One wonders why a profit-making company with a strong track record and the franchise of India’s first digital platform did not have the comfort of its own customers. There are enough examples where ICICIC Direct.Com has single handed subscribed to the retail portion of a number of issues. Here they chose to take a simpler way out of allocating 75% to QIB’s, 15% to HNI’s and 10% to retail, in an issue where they have a strong retail base. Surprised at the decision.

To top it they believe that having a battery of merchant bankers will ensure that the QIB portion is done. The anchor book was well subscribed and received with 3.30 cr shares being allocated to 33 anchor investors comprising of 58 entities. After this response the balance of the QIB book was subscribed a mere 1.04 times. For the six merchant bankers put together it is a matter of shame that they could not do this. Secondly if the pricing was wrong and they have reduced it once between December and March, they should have the courage to reduce it further and get the issue subscribed in totality. This dismal performance of 78% subscription for a subsidiary of ICICI Bank is indeed unacceptable. And finally, what is the guarantee that on listing the price of Rs 520 will hold? If it does and tanks who would be responsible?