With 18 banks on board, the syndicate for ICICI Prudential Asset Management Company's IPO is the largest ever seen in India, but only two banks – Citigroup and ICICI Securities – are playing meaningful roles in marketing and pricing the deal and filling the anchor book, according to people with knowledge of the deal.
Citigroup is the preferred bank of UK insurer Prudential, which is selling a 9.9% stake in the Indian asset manager's up to Rs106bn (US$1.2bn) all-secondary IPO, people with knowledge of the transaction said. ICICI Securities is looking after the interests of ICICI Bank, the parent of both the AMC and the securities firm.
Prudential, ICICI Bank, ICICI Securities and Citigroup could not be reached for comment.
Market participants said ICICI Prudential AMC has included so many banks in the syndicate for relationship purposes as many of these financial intermediaries sell its products to retail and private banking clients. The same logic is expected to apply to the upcoming jumbo IPO of SBI Funds Management, which is in the process of hiring banks.
"In any IPO only a handful of banks play an important role in discussions with the management and investors but here it is just two," an ECM source with knowledge of the ICICI Prudential AMC IPO said.
A Mumbai-based banker working on the deal said he was approached by an investor interested in participating as an anchor, "but I told him to go to Citi or ICICI Securities as he had a better chance of getting allocations".
The 13.9m shares in the anchor tranche represents 28% of the offer and was open for one day on Thursday, with only four to five banks allowed to set up meetings with potential investors.
"Prudential is running a very tight ship. We had absolutely no visibility on the anchor book," another ECM source on the transaction said. Typically, the full final list of anchor investors is shared with syndicate bankers before it is made public.
Singapore's Temasek Holdings was allocated 8.2% of the anchor tranche, followed by Life Insurance Corporation of India, Capital Group and Singapore's GIC at 5.6% each. Other anchor investors include HDFC Mutual Fund, SBI Mutual Fund, Abu Dhabi Investment Authority, Norway's Government Pension Fund Global and Fidelity funds.
Anchors are expected to subscribe at the top of the Rs2,061–Rs2,165 range.
Uniform title
Outsiders have no way of gauging who might be playing an outsize role in an Indian IPO syndicate as all arrangers carry the same title. In 2021, the Securities and Exchange of India mandated that all the banks in a syndicate be designated as bookrunning lead managers. Sebi's thinking was that all the banks are equally responsible, even if they perform different tasks.
"Sebi felt banks couldn't escape accountability under the guise of being a junior or a senior bank," the ECM source said.
"Sebi thought issuers don't have to pander to a banker's ego by giving different titles, but the trouble is that investors end up not knowing which bankers matter in the long laundry list," the Mumbai-based banker said.
Market participants said investors eventually find out which banks are in the driving seat based on who reaches out to them and arranges meetings with the issuer.
"For a banker, what matters is the investors they bring to the IPO and the fee they get," the ECM source said. The fee typically includes a variable component that takes into account the investors that a bank is able to bring to the transaction.
The ICICI Prudential AMC offer runs from December 12–16 and the listing is targeted for December 19.
Goldman Sachs, Morgan Stanley, Avendus Capital, Axis Capital, Bank of America, BNP Paribas, CLSA, HDFC Bank, IIFL Capital, JM Financial, Kotak, Motilal Oswal, Nuvama Wealth, Nomura, SBI Capital and UBS are the other bookrunning lead managers.
Ahead of the deal, London and Hong Kong-listed Prudential said on Thursday it had sold 22.2m shares, or a 4.5% stake in ICICI Prudential AMC, at Rs2,165 to 26 investors including ICICI Bank, Lunate Capital, SBI Life Insurance, HDFC Life Insurance and Go Digit General Insurance.
Prudential owned 49% of the company and ICICI Bank had 51% before the placement and IPO.