 "ICICI Prudential Life IPO subscribed 10 times")
The Rs 6,000-crore initial public offering (IPO) of ICICI Prudential Life Insurance Company, the biggest in six years and the first by an insurance company, attracted strong demand from investors. The IPO saw nearly 10 times more demand than shares on offer with bids totalling about Rs 45,000 crore.
Demand was particularly strong from institutional and wealthy investors (those applying for more than Rs 2 lakh). The retail portion, however, was subscribed just 1.3 times. The IPO also had special reservation for individual shareholders of ICICI Bank. The shareholder portion saw 12 times subscription.
The price band for the IPO was Rs 300-334 per share. Given the demand, the IPO is likely to be priced at the top end, valuing the insurer at Rs 48,000 crore.
ICICI Prudential Life’s strong brand, leadership in the private life segment and attractive valuation against its peers (HDFC Life and Max Life combined) attracted investors.
On March 18 enterprise value (EV), ICICI Prudential Life was valued at 2.45-2.73 times, 20-30 per cent discount to the multiple of HDFC and Max Life combined, according to the Nomura report.
The parent, ICICI Bank, sold 12.7 per cent stake in the IPO, paring its holding to slightly below 55 per cent in the firm. Prudential, which owns 25.87 per cent, didn’t sell any stake in the IPO. After the IPO, the public float in the company will be around 19 per cent and the insurer will have to increase it further to at least 25 per cent in next three years to achieve Sebi’s minimum public shareholding criteria.
Last year, the government raised the foreign investor cap in insurance companies from 26 per cent to 49 per cent. The higher investment ceiling allowed foreign institutional investor (FII) participation. Market players say there will be further room for FII participation in the secondary market, which will bode well for the stock’s post-listing performance.
Bank of America Merrill Lynch, ICICI Securities were the lead bankers managing the IPO. Besides them, Citic CLSA, Deutsche Bank, Edelweiss, HSBC, IIFL, JM Financial, SBI Capital Markets and UBS also worked on the share sale.
ICICI Pru Life’s IPO was the fifth-biggest in the domestic market and the biggest since Coal India’s Rs 15,000-crore offering in October 2010.
Demand was particularly strong from institutional and wealthy investors (those applying for more than Rs 2 lakh). The retail portion, however, was subscribed just 1.3 times. The IPO also had special reservation for individual shareholders of ICICI Bank. The shareholder portion saw 12 times subscription.
The price band for the IPO was Rs 300-334 per share. Given the demand, the IPO is likely to be priced at the top end, valuing the insurer at Rs 48,000 crore.
ICICI Prudential Life’s strong brand, leadership in the private life segment and attractive valuation against its peers (HDFC Life and Max Life combined) attracted investors.
On March 18 enterprise value (EV), ICICI Prudential Life was valued at 2.45-2.73 times, 20-30 per cent discount to the multiple of HDFC and Max Life combined, according to the Nomura report.
The parent, ICICI Bank, sold 12.7 per cent stake in the IPO, paring its holding to slightly below 55 per cent in the firm. Prudential, which owns 25.87 per cent, didn’t sell any stake in the IPO. After the IPO, the public float in the company will be around 19 per cent and the insurer will have to increase it further to at least 25 per cent in next three years to achieve Sebi’s minimum public shareholding criteria.
Last year, the government raised the foreign investor cap in insurance companies from 26 per cent to 49 per cent. The higher investment ceiling allowed foreign institutional investor (FII) participation. Market players say there will be further room for FII participation in the secondary market, which will bode well for the stock’s post-listing performance.
Bank of America Merrill Lynch, ICICI Securities were the lead bankers managing the IPO. Besides them, Citic CLSA, Deutsche Bank, Edelweiss, HSBC, IIFL, JM Financial, SBI Capital Markets and UBS also worked on the share sale.
ICICI Pru Life’s IPO was the fifth-biggest in the domestic market and the biggest since Coal India’s Rs 15,000-crore offering in October 2010.