ICICI Pru Life's Rs6,000-crore IPO opens for subscription

The Rs6,000 crore initial public offer of ICICI Prudential Life Insurance, which opened for bidding today received bids for as many as 4.08 lakh of the over 132 million shares on offer. Stock exchange data shows total subscription at 0.30 per cent against the issue size of 132.3 million shares.

ICICI Prudential has priced the issue at Rs300-334 and at the upper limit of the price band the IPO would receive Rs4,419 crore.

The insurer had, on Friday, allotted shares worth Rs1,635 crore to anchor investors and together the sale of 181.3 million shares will fetch a little over Rs6,000 crore.

Wipro's billionaire founder Azim Premji and Singapore Government-owned Temasek Holdings already hold 4 per cent and 2 per cent stake in the insurer.

On Day 1 of the bidding, investors are reported to have bid for 14.3 million or 10.93 per cent of the 132 million shares on offer, the biggest initial public offer (IPO) in nearly six years, since Coal India's IPO in 2010.

Investors can buy a minimum of 44 shares in the price band of Rs330-334. Out of the 18.13 crore shares on offer, 10 per cent is reserved for the shareholders of ICICI Bank.

Stock market data showed that retail institutional investors have bid for 8.9 million shares, while non-institutional investors have bid for 7.97 lakh shares. QIBs have bid for 6 per cent of their quota by 2.30 pm.

ICICI Prudential, a joint venture between ICICI Bank (67.6 per cent) and UK's Prudential Corporation Holdings (26 per cent), started operations in 2001.

The IPO is an offer for sale by ICICI Bank, which means that the private lender is offloading part of its shareholding in the insurer. Post the IPO, ICICI Bank's stake in ICICI Prudential will come down to around 55 per cent. ICICI Prudential's market capitalisation is likely to be Rs48,000 crore if issue gets subscribed at the upper end of the price band.

At the upper limit of the price band, the company would have a value of about Rs48,000 crore.

ICICI Prudential had in November 2015 sold 6 per cent of its stake in November 2015 to investors such as Azim Premji and Temasek Holdings for Rs1,950 crore, valuing the company at Rs32,500 crore.

The present offer comprises 12.63 per cent of total post-paid equity share capital of the company. As of 31 March, ICICI Bank held 67.6 per cent stake in the life insurance firm, while Prudential Corp Holdings (PCHL) held 25.9 per cent.

ICICI Bank will sell its stake in the IPO, but Prudential will not dilute its holding.

The total size of the Indian life insurance sector (excluding Sahara Life Insurance) was Rs3,70,000 crore on a total premium basis in financial year 2015-16, making it the 10th largest life insurance market in the world and the fifth largest in Asia, Swiss Re said.

The total premium of the Indian life insurance sector grew at a CAGR of approximately 17 per cent between FY01 and FY16. India remains an underpenetrated insurance market with a life insurance penetration of 2.7 per cent in FY15 against 7.3 per cent in South Korea, 3.7 per cent in Thailand and a global average of 3.5 per cent in 2015.