ICICI Prudential Life Insurance IPO subscribed 16 per cent on the first day of offer till 5 pm. The public offer received bids for 2,08,93,356 shares against 13,23,78,973 shares offered by the company. The company was incorporated in 2001 and is the largest private sector insurance player and the second largest overall, behind LIC, in terms of premiums. The company is owned 68 per cent by ICICI Bank, 26 per cent by Prudential Corporation, UK, 4 per cent by Hasham Traders (Azim Premji), and the rest by other institutional investors and employees. The company has fixed a price band of Rs 330-334 per equity shares for the offer and the issue will close on September 21.
ICICI Prudential has allocated over 4.89 crore shares at the upper price band of Rs 334 to anchor investors from India and abroad. It marks one of the biggest anchor investor placements in the domestic primary market. Among the 40-odd anchor investors are Goldman Sachs, Nomura, Morgan Stanley, Government of Singapore, Russell Investment, UTI MF, GMO Emerging, SBI MF, Tata MF, HDFC Standard Life, Reliance, Kotak Mahindra, Birla Sun Life, IDFC, National Pension Service Managed By Oaktree Capital Management L P and The Boeing Company Employee Retirement Plans Master Trust.
According to Prabhudas Lilladher, ICICI Prudential has one of the lowest expense ratios among peers as banca & direct (digital) channel sources 57 per cent and 11 per cent of new business on the back of strong distribution network of ICICI Bank (over 4,000 branches) and tie-up with StanC. Banca and direct sourcing have negligible costs with better persistency and the company is using these channels to improve its protection business and is margin accretive. The brokerage house has ‘Subscribe’ rating on the issue.
“RoEV of ICICI Prudential are likely to improve to 18‐19 per cent by FY18 on high business growth, improving margin on the back of improving persistency and better equity cycle and hence we recommend to subscribe for long-term gains,” Prabhudas Lilladher added.