"Following the board nod, the institution's search for a foreign partner has intensified. The institution may zero in on either the UK-based Prudential or Deutsche Bank," sources close to ICICI said. The board has given a go-ahead for technical as well as equity tie-ups.

The management had put forward the proposal for a tie-up with a strategic partner before the board as it felt that an overseas partner would give ICICI the necessary edge to metamorphose into a universal bank. "ICICI wants to be a financial conglomerate and it needs both capital as well as technology," said sources.

Currently, ICICI is negotiating with its three principal institutional investors - Life Insurance Corporation, General Insurance Corporation and Unit Trust of India - on the "right price" of theinstitution's shares to be privately placed with them (the institutions).

The transaction between ICICI and financial institutions will take place after the term-lending institution gets shareholders' approval for the board resolution at its forthcoming annual general meeting on July 30.

ICICI is planning a massive equity float of Rs 2,000 crore over the next few months which will include a global depository receipt (GDR) issue as well as private placements with UTI, LIC and GIC. The three institutions will collectively hold close to 33 per cent in ICICI after the conversion of 10-year fully convertible debentures in July.

The original plan was only for a GDR but the ICICI board cleared the proposal for a simultaneous private placement with its principal shareholders as the institutional investors had impressed upon the board that in case they went in for only a GDR issue, the gross foreign holdings (including FII and NRI holdings) may go beyond 50 per cent. This would have diluted the holdings of thedomestic institutions.

"The board also gave the in-principle approval for a strategic tie-up. This can be done through a private placement. "The present holding of the FII and NRI combine is less than 15 per cent. There is enough leeway to accommodate a foreign equity partner," sources said.

According to the notice sent by ICICI to the stock exchange, shareholders' approval will be sought to raise equity shares up to an aggregate face value of 25 per cent of the authorised share capital.

Approval will also be sought to increase the authorised equity share capital from Rs 600 crore to Rs 1,600 crore and preference share capital from Rs 1,350 crore to Rs 5,350 crore.

An ICICI release issued on June 28 said that the plan for the equity issue "is a proactive move by ICICI to further strengthen its capital base in order to sustain accelerated growth and to capitalise on market opportunities."

ICICI's scrip opened at Rs 86 on the Bombay Stock Exchange on Thursday, down marginally from its previous closeof Rs 86.40. After touching a high of Rs 87, the scrip closed at Rs 85.50. According to marketmen, trading at the counter was lacklustre, in line with the general sentiment prevailing on the bourses. Volumes also dropped from Wednesday's level of 20 lakh shares to 4.52 lakh shares on the BSE.