The initial public offering (IPO) of ICICI Lombard General Insurance has been cleared by the board of ICICI Bank. The general insurance provider, formed in 2001, is a joint venture between country’s largest private sector ICICI Bank and Prem Watsa-run Fairfax Financial Holdings. With this, ICICI Lombard is all set to become the first private sector general insurer in the country to go public. ICICI Bank’s life insurance venture ICICI Prudential Life Insurance is the first and only listed insurance entity in India.
“The board of directors of the bank on Monday approved the sale of a part of its shareholding in ICICI Lombard General Insurance Company Ltd (Company) in an initial public offering (IPO) by the Company,” ICICI Bank said in a regulatory filing. In the filing to the exchanges, ICICI Bank also mentioned that the IPO is subject to requisite approvals and market conditions.
It is anticipated that the insurer may get listed by the first quarter of the next financial year. New India Assurance and General Insurance Corporation of India will already be listed this year. Apart from these insurance providers, SBI Life and HDFC Life are also looking to get listed.
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Last week, ICICI Lombard’s foreign joint venture partner Fairfax sold 12.18 per cent in the insurance company to private equity firms Warburg Pincus, IIFL Special Opportunities Fund and Clermont Group. This deal had valued ICICI Lombard at Rs 20,300 crore. Prior to this sale, Fairfax held 35% in ICICI Lombard. After the IPO, the stake is likely to fall from 23% to 10%, according to sources.
The reason for Fairfax’s exist from Lombard is its proposed JV with another insurance company, which it is promoting with Kamesh Goyal, the former CEO of the Indian unit of German insurer Allianz. The proposed insurance company has already received preliminary approvals from the Insurance Regulatory and Development Authority of India (IRDAI). However, rules state that a promoter cannot have substantial stakes in two insurance entities and therefore Fairfax has to reduce its share to 10 per cent in ICICI Lombard.