ICICI Prudential Life Insurance has priced its initial public offering (IPO) aimed at raising Rs 6,057 crore (when calculated at the upper end of the price band), between Rs 300 and Rs 334 per share. The IPO is entirely an offer for sale (OFS) of 18.1 crore equity shares of face value of Rs 10 each by ICICI Bank. The issue has reserved 1.81 crore shares for shareholders of ICICI Bank. Bids can be made for a minimum of 44 equity shares and in multiples of 44 shares thereafter.
The insurance firm had filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) on July 18 and received approval on September 2. ICICI Prudential is a joint venture between private lender ICICI Bank and the UK’s Prudential Corporation Holdings with a stake of 68% and 26% in the company respectively. ICICI Bank will be selling 12.63% of its stake in the company, while Prudential Life Insurance will not dilute its stake. At Rs 334 per share, ICICI Prudential Life will be valued at Rs 47,939 crore.
Chanda Kochhar, chairperson of ICICI Prudential Life Insurance Company, said, “Indian life insurance is the tenth-largest insurance market in the world and the fifth-largest in Asia in terms of total premium in 2016. However, there is still under-penetration of life insurance in India. In fact, life insurance penetration in India was at 2.7% in fiscal year 2015 compared to the global average of 3.5%. ICICI Prudential Life is India’s largest private sector life insurer in terms of both assets under management and total premium in fiscal 2016.”
In 2015-16, ICICI Prudential Life’s total premium stood at Rs 19,164 crore, the persistency ratio of the company was 82.4%, the highest in the sector, AUM was at Rs 1.09 lakh crore. The total expenses of the entity is one of the lowest at 14.6%. Kochhar also said that, in the next three years share of ICICI Bank and Prudential Corporation Holdings will be brought down to 54% and 20% respectively in the ICICI Prudential Life Insurance.
According to SEBI ICDR Regulations, the public shareholding or free float market capital of a listed company should be at least 25%. In case of ICICI Prudential, the public share holding prior to listing was 6%. Through the IPO ICICI is divesting another 12.63%. Hence as on the day of listing the public shareholding would be close to 19%. The promoters including Prudential should divest another 6% in the next three years to abide the SEBI regulation.
In November last year, ICICI Bank had sold 6% stake in the life insurer to Azim Premji and Compassvale Investments which is a subsidiary of Temasek. As on March 31, 2016, Azim Premji holds 4% while Temasek gold remaining 2%. At that time deal was valued at Rs 32,500 crore.
Currently, there are 23 private life insurance companies and the top four players command a market share of 65%. According to the annual report of ICICI Prudential Life Insurance 2015-16, market share of the insurer is at 21.9% among private players. However, combined market share of recently announced deal between HDFC Life and Max Life would be around 24% while the total assets would be over Rs 1 lakh crore.