ICICI Lombard General Insurance Rs 5,700 crore IPO which opened on Friday got subscribed 26.91% at the end of day one of bidding. The quota reserved for QIB (qualified institutional buyers) was subscribed 62.06% while NII (non-institutional investors) category got subscribed 3.85%. The shares reserved for retail investors was subscribed 18.14% at the end of the first day of bidding. The public offer will remain open until 19 September 2017.
ICICI Lombard to raise about Rs 5,700 crores at the higher end of the price band which is set between Rs 651-661 per share. The initial share sale will see stakeholders ICICI Bank Ltd and Fairfax Financial Holdings Ltd sell around 86.24 million shares. ICICI Bank looks to sell 31.76 million shares to get Rs 2,099.40 crore while Fairfax will look to raise Rs 3,601.50 crore by selling 54.48 million shares. The ICICI Lombard IPO will see a dilution of over 19% stake—7.15% of ICICI Bank and 12.27% of Fairfax.
ICICI Lombard GIC was founded in 2001 and is one of the leading private sector general insurance companies in India with a Gross Written Premium (GWP) of Rs 109.60 billion for the year ended March 31, 2017. It offers a range of insurance products such as motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance, through multiple distribution channels.
Angel Broking said the non-life insurer’s stock may appear to be fairly valued at 8 times its 2016-17 book value, but it has the potential to deliver high double-digit growth for the years to come. Motilal Oswal says the sector provides opportunities for growth on the back of significantly lower penetration and lower insurance density compared to other developed and emerging economies. KR Choksey says that the issue is expensive compared to the general industry trend, however, has a subscribe rating give the long-term prospects. Centrum Wealth also concurred that the issue is expensive, however, the brokerage firm has a subscribe rating as the non-life insurance segment is under penetrated in India and the company’s financials are strong.
Chanda Kochhar’s view
In conversation with ET Now, Chanda Kochhar, Chairperson ICICI Lombard GIC said, “I really cannot comment on the returns going forward but if you go by an example, last year we did an IPO of our life insurance company and if you see the track record there so far for those investors the group has delivered a 33% annualised return just in this last year.”