ICICI Lombard IPO opens today: Brokerages give thumbs up

16 September, 2017, 15:55 | Author: Eloise Marshall
  • ICICI Lombard IPO – get insured for the long-term

The initial share sale offer of ICICI Lombard General Insurance was subscribed 27% on the first day of the 3-day bidding on Friday.

The qualified institutional buyer (QIB) category was subscribed 62%, non-institutional investors 4% and retail individual investors 18%.

ICICI Lombard General Insurance Company enjoys a market share of almost 8.5% among non-life insurers. The company's IPO involves dilution of up to 86,247,187 shares by promoters - ICICI Bank and Fairfax. The issue will close on September 19. The merchant bankers have fixed a price-band in the range of Rs 651-661 for the issue.

India's largest private sector lender ICICI Bank now holds 28,56,05,284 equity shares, equivalent to 62.92 percent of the pre-offer paid-up equity share capital of the company and 21.91 percent stake is held by FAL (a nominee of Fairfax).

The company was founded as a joint venture between ICICI Bank and Fairfax Financial Holdings, a Canadian based holding company through its subsidiaries.

The initial public offering of up to 8,62,47,187 equity shares comprises of an offer for sale of up to 3,17,61,478 shares by ICICI Bank and up to 5,44,85,709 shares by FAL Corporation.

ICICI Lombard announced on Thursday (September 14) that it has raised Rs 1624 crore by allotting shares to institutional investors as part of its anchor book allocation. 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.

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ICICI Lombard IPO: A Preview Of India's First Non-life Insurance IPO

On September 14, 2017, ICICI Lombard raised almost Rs 1625 crore from somewhat 64 anchor investors by alloting them 2.45 crore equity shares at the upper price band of Rs 661 per share.

ICICI Lombard's IPO opens today.

In 2017, companies raised Rs 16,254 crore through IPOs. In its pre-IPO note, the brokerage said the insurance sector may see high growth in the coming years due to increasing awareness of risk cover and shift of savings to financial assets.

The brokerage said ICICI Lombard's valuation is high considering the return on equity (ROE) of 17.2% for financial year ended March 2017, loss ratio of 80.6% and the combined ratio of 104% is lower than the average of private peers.

Birla Sun Life Insurance Company and Kotak Mahindra Old Mutual Life Insurance Company also invested. ICICI Lombard being the leader in the sector is well placed to benefit from this trend, the brokerage said.

In June 2017, Fairfax made investment in Oben General Insurance that obtained an in-principle approval from IRDAI to form an insurance company in India.

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