http://www.livemint.com/Money/w5NYbmQwG5jHMVJSXtOE0N/ICICI-Pru-Life-IPO-a-good-bet-on-insurance.html
http://www.livemint.com/Companies/iKztPSN18O3I55nmpoxyQP/ICICI-Bank-raises-Rs1635-cr-selling-ICICI-Pru-Lifes-shares.html
ICICI Bank raises Rs1,635 cr selling ICICI Pru Life’s shares in pre-IPO allotment
The bank sold 48.96 million ICICI Prudential Life shares to institutional investors at Rs334 per share, the upper end of the Rs300-334 price band for the IPO, as per a filing.
Mumbai: Private sector lender ICICI Bank Ltd on Friday raised Rs1,635.33 crore by selling shares in its life insurance arm as part of the Rs6,056 crore initial public offering (IPO) beginning next week, the company said in a stock exchange filing.
India’s largest private sector bank sold 48.96 million ICICI Prudential Life shares to institutional investors. The sale took place at Rs334 per share, the upper end of the Rs300-334 price band for the IPO, as per the filing.
Morgan Stanley Mauritius Co. Ltd bought shares worth Rs207.45 crore, 12.68% of the total anchor book value. Sovereign Wealth Fund GIC Pvt. Ltd (formerly Government of Singapore Investment Corp.) bought shares worth Rs145.78 crore, 8.9% of the anchor book.
Other investors bidding for ICICI Prudential shares in the anchor allotment include Nomura Investment Fund Mother Fund, Nomura Singapore Ltd, Monetary Authority of Singapore, National Pension Service managed by Oaktree Capital Management LP, Goldman Sachs (Singapore) Pte, UTI Mutual Fund, various schemes under Birla Sun Life Trustee Co. Pvt. Ltd, and SBI Funds Management Pvt. Ltd.
The anchor book is the portion of the IPO that bankers allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest. Investors in the anchor book have to remain locked-in for 30 days from the allotment.
The public issue will open on 19 September and close on 21 September. Based on the upper end of the IPO price, ICICI Prudential will be valued at Rs47,955 crore.
The company had filed its IPO proposal with the Securities and Exchange Board of India (Sebi) on 18 July and received the regulator’s approval on 2 September.
Parent firm ICICI Bank Ltd is looking to divest a 12.63% stake in the life insurance arm through the offer-for-sale (OFS) route. Prudential Corp. Holdings Ltd is also expected to trim its stake in insurance company by up to 5.83% after its listing as part of the revised terms of the joint venture (JV) agreement.
ICICI Bank Ltd and Prudential agreed to shed their stake in the insurer with a floor of 54% and 20% stake respectively, to make the listed entity compliant with the Sebi’s minimum public shareholding norms.
Currently, ICICI Bank holds 67.52% and Prudential 25.83% as the two promoters of India’s largest private sector life insurer.
The rest is held by others, including billionaire investor Azim Premji’s firm M/s Hasham Traders (4%) and Compassive Investment Pte. Ltd (2%), a wholly-owned unit of Temasek Holdings.
This was after ICICI Bank sold 6% stake in November 2015 which valued the insurance company at Rs32,500 crore. The total deal value stood at about Rs1,950 crore.
Following the initial share sale, ICICI Bank’s stake in the insurer will drop to 54.89%, leaving little room for ICIC Bank to shed more stake as part of the foreign investment policy in the insurance sector.
Investment banks ICICI Securities Ltd and Bank of America Merrill Lynch have been hired as the tier-I banks to manage the share sale.
Other banks hired to manage the share sale are CLSA India Pvt. Ltd, Deutsche Equities India Pvt. Ltd, Edelweiss Financial Services Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd, IIFL Holdings Ltd, JM Financial Institutional Securities Ltd, SBI Capital Markets Ltd and UBS Securities India Pvt. Ltd.
ICICI Prudential Life posted consolidated revenue of Rs8,884.37 crore for the three months to June. Its net profit stood at Rs404.9 crore for the same period, according to the information available in the red herring prospectus.
The company reported consolidated revenue of Rs20,227.94 crore for full-year fiscal 2016 compared with Rs33,955.76 crore in fiscal 2015. Its net profit for FY16 stood at Rs1,652.72 crore compared with Rs1,640.35 crore in the year prior, as per the prospectus.
As of 31 December 2015, ICICI Prudential Life had assets under management of Rs1.01 trillion.
The insurance sector has assets under management of Rs22.4 trillion, of which the share of India’s 23 private sector insurers is only Rs4.61 trillion, according to the Insurance Regulatory and Development Authority of India. The insurance industry generated Rs3.28 trillion in premiums last year, of which the private sector’s share was Rs88,433 crore.
Other insurance firms are also looking to tap the market.
In May, Business Standard reported that SBI Life Insurance, a joint venture of the State Bank of India and BNP Paribas Cardiff, is likely to sell shares to the public.
On 19 April, the board of Housing Development Finance Corp. Ltd (HDFC) approved a proposal to sell around 10% in HDFC Standard Life Insurance Co. to the public.
In June, HDFC Standard Life, Max Financial Services Ltd and its unit Max Life Insurance Co. Ltd announced merger talks that may lead to the creation of an insurance firm with Rs1.1 trillion in assets.
The merger will eventually result in the listing of HDFC Standard Life, as Max Financial Services already trades on the Indian exchanges.
The combination of the entities would become India’s largest private sector life insurer, surpassing ICICI Prudential Life Insurance. It will be second only to state-run Life Insurance Corp. of India, which has a 70% share of new business premiums in the country.
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