ICICI Prudential MF files consent plea

Seeks to settle issue related to investment in ICICI Securities’ IPO with SEBI ICICI Prudential Mutual Fund has filed a consent application with the Securities and Exchange Board of India (SEBI) to settle the proceedings initiated by the latter over its investment in the initial public offer (IPO) of ICICI Securities. The fund house, which is the country’s largest in terms of assets under management, came under the regulatory scanner after it put in a second bid worth ₹2400000000 on the final day of bidding for shares of its group company ICICI Securities whose public issue in March managed to get subscribed only 0.78 times. According to a person familiar with the development, the fund house has proposed to settle the proceedings after having already complied with a part of the regulatory diktat that forced it to sell the shares of ICICI Securities and credit ₹2400000000 in five schemes through which it bid for shares of ICICI Securities on the final day of bidding. “While the shares have been sold and the money has been credited back to the schemes, there were adjudication proceedings also initiated against the fund house, which it wants to settle by way of consent,” said a person familiar with the development Consent terms “The consent terms put forth by the fund house include payment of the settlement amount that has been arrived at on the basis of the SEBI formula and the matter would be closed without admission or denial of guilt,” he added on conditions of anonymity as the consent order is yet to be passed. While email queries sent to the SEBI and ICICI Prudential MF remained unanswered , it is believed that the settlement amount is approximately ₹10000000. Valuation dips The fund house had bid for shares worth ₹4000000000 on the first day of the public issue of ICICI Securities, whose valuation has dipped significantly after listing. The shares are trading at ₹238 now, which is less than half the issue price of ₹520 a share. SEBI acted against the fund house since it believed that the last day bid of ₹2400000000 by the group entity came at a time when the issue was facing difficulties in getting fully subscribed, especially the institutional portion that barely managed to sail through with 1.04 times subscription. Assuming the bid of ₹2400000000 was made at the upper end of the price band – ₹520 – it would have constituted nearly 30% of the total bids put in by mutual funds, as per bidding details available on the National Stock Exchange website. ICICI Prudential Mutual Fund was, however, not the only fund house to bid for shares of ICICI Securities. As per the shareholding information available on the BSE, there are a total of 16 mutual funds entities that collectively hold 10.57% stake in the company. While ICICI Prudential MF is the largest among the lot with a stake of 2.39%, Land T Mutual Fund and IDFC Mutual Fund also hold over 1% each, as per the information for the quarter ended September 30.