MUMBAI: ICICI Bank, India’s largest private sector lender by asset size, Friday raised Rs 3,001 crore via infrastructure bonds for the first time in four years reflecting the emerging optimism in building ports and roads in an economy that is expected to rebound steeply as vaccinations and slowing infections raise hopes.
The bonds offered 6.45 percent with seven-year maturity. ICRA rated those papers with AAA (Stable) grade.
At least two pension funds LIC New Pension Scheme (NPS) and UTI NPS, fund houses like Aditya Birla MF, Tata MF and insurer Bajaj Alliance likely subscribed to those papers through the bidding process. The bank obtained and retained about one and a half dozen bids.
The proceeds will be used to lend to the infrastructure sector along with low-cost affordable housing. ICICI Bank had last raised infrastructure bonds for Rs 4,000 crore in 2016-17.
Some banks are said to have lapped up those top-rated debt securities through a bidding process only to sell down their holdings to different mutual funds including SBI, HDFC and Tata Life Insurance.
Individual investors could not be contacted immediately for comments. ICICI Bank did not reply to ET’s request for comment till press time.
“Infrastructure bonds hit the market after a long gap, suggesting that the borrower has pockets of deployments,” said Ajay Manglunia, managing director – debt capital market, . “Demand for infrastructure credit is gradually coming up with the unfolding of the unlocking programme.”
The core size of the issue was pegged at Rs 1,000 crore with an option to retain subscription up to Rs 4,000 crore. Pension funds are likely to have owned larger sums than mutual funds running up to Rs 600 crore for a single bid.
“The bank’s current capital is sufficient to support its growth requirements over the medium term and absorb the expected asset quality shocks,” ICRA said in a note.
ICICI Bank reported a 104 percent jump in its standalone net profit for the financial year ended March 31, 2021, at Rs 16,192.68 crore.
In the January-March quarter, the lender reported another phenomenal rise of 260.47% year-on-year in net profits.
“We remain positive on ICICIBANK, considering a strong balance sheet, strong growth in advances, high CASA (Current Account-Savings Account) ratio and improving asset quality,” AnandRathi brokerage said in a report.
Total loans increased by 14% year-on-year to Rs 7,33,729 crore as on March 31, 2021 from Rs 6,45,290 crore a year ago.