ICICI Lombard has filed draft red herring prospectus (DRHP) with capital market regulator SEBI to float its IPO. The company is a joint venture between ICICI Bank and Fairfax Financial Holdings. The maiden IPO from a general insurance company in India will involve sale of 86,247,187 shares through an offer for sale (OFS) by ICICI Bank and FAL Corporation – an affiliate of Fairfax Financial Holdings. According to sources with knowledge of the matter, ICICI Lombard IPO will raise around INR3,500-4,000 crore (INR35-40 billion), although ICICI Lombard will not get any proceeds. The sale of nearly 19% shares mean the company will be valued at INR21,000 crore.
The IPO will be managed by Bank of America Merrill Lynch, ICICI Securities Ltd, IIFL Holdings Ltd, CLSA India Pvt Ltd, Edelweiss Financial Services Ltd and JM Financial Institutional Securities Ltd.
ICICI Lombard IPO = OFS IPO
Canadian billionaire Prem Watsa’s Fairfax holds 99,464,479 shares, or 21.92% stake in the company. Out of the total, it plans to sell 54,485,709 shares, or a 12% stake to bring down its holding to less than 10%. Under the current rules, no entity can own more than 10% equity stake in two or more insurance firms. As Fairfax is planning to invest in a yet unnamed insurance company, to be led by former Allianz executive Kamesh Goyal, it needs to reduce its stake in ICICI Lombard. In May, it sold 12% stake to three entities including an affiliate of Warburg Pincus. The other firms were Tamarind Capital, a company owned by the Clermont Group of Singapore and IIFL Special Opportunities Fund, managed by the IndiaInfoline group.
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The remaining 31,761,478 shares will be offered by ICICI Bank which will see its shareholding in the insurer dropping to 56%.
ICICI Lombard to set pace for government GICs
ICICI Lombard’s performance on the bourses will set the tone for further general insurance companies (GICs) and there are several in the queue to get listed. Earlier this year, the government cleared IPOs of five general insurance companies – New India Assurance Company, United India Insurance, Oriental Insurance Company, National Insurance Company and reinsurer General Insurance Corporation of India (GIC). With appointment of bankers in May, New India Assurance is among the most prepared of the lot for an eventual IPO.