Published: Sat, September 16, 2017
Medicine | By Earnest Bishop

ICICI Lombard IPO subscribed 27% on Day 1

ICICI Lombard IPO subscribed 27% on Day 1

It is the second insurance company from the ICICI Group to go for an IPO after ICICI Prudential Life Insurance raised Rs 6,000 crore in an initial share sale previous year, the first public offering by an Indian life insurer.

ICICI Bank will sell the remaining 31.76 million shares. The IPO was subscribed 0.27 times.

Valuations appear a bit on the higher side, but then, if one is willing to consider the long term prospects for the sector in general and the company in particular, investing in the IPO is a good call. The investors who acquired shares through anchor allotment include The Nomura Trust, Blackrock India Equities, SBI Life Insurance, Citigroup Global Markets, SBI Life, BNP Paribas Insurance, among others. At the upper end of the IPO price band, insurer trades at 46.5 times its March 2017 earnings per share (EPS) which implies that it is fully priced, the brokerage said in its pre-IPO note on ICICI Lombard, recommending "subscribe for long term gains".

ICICI Lombard has a market share of 10.05 per cent in the non-life insurance industry as on July 2017, showed data from the Insurance Regulatory and Development Authority of India (Irdai). Post-issue, the shareholding of Fairfax will come down to 9.91 per cent, from 21.9 per cent now, while the same for ICICI Bank will be reduced to 55.95 per cent, from 62.95 per cent. The insurer would allot shares to 64 anchor investors at Rs 661 apiece - upper end of the IPO price band.

The initial share sale offer would close on September 19. The value of ICICI Lombard's investments assets stood at almost Rs 15,100 crore as on 31 March 2017, easily the most among private non-line insurance companies in the country. However, the issue may be a hit because it is the first general insurer to list, it said.

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Analysts at NVS said, "On the basis of improving macro-economic factors and increasing insurance awareness in India, ICICI Lombard has a huge potential to increase its market share and grow in the nonlife insurance space". "But in this case 100% of the money raised is going to the selling shareholder and not into the company". The company has a robust payout ratio.

The duo added, "ICICIL may attract adequate investor interest as it is the first general insurance listing, the under-penetration in the sector and the company's healthy financials".

The general insurance company offers a comprehensive and well-diversified range of products, including motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance, through multiple distribution channels. For ICICI Bank group, this is the second public offer this fiscal.

Compared with peers, ICICI Lombard holds the leadership in non-life insurance and has maintained it since 2004.

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