ICICI Prudential Life has filed its draft red herring prospectus (DRHP) with SEBI to launch its IPO. Through ICICI Prudential IPO, ICICI Bank plans to sell 181,341,058 equity shares or 12.65% in the life insurance company. Since all the shares in the IPO will be sold by ICICI Bank, ICICI Prudential Life will not get any funds from the public offer. ICICI Prudential IPO will be the first insurance pubic offer in India and could end up raising around INR5,000 crore in one of the biggest IPOs in India in recent years.
ICICI Prudential Life is a joint venture between India’s private sector lender ICICI Bank and UK’s Prudential. Prudential holds 26% equity in the insurance venture and will not be selling shares in the IPO. Azim Premji is also an investor with 4% stake and will not be participating in the IPO. ICICI Bank owns nearly 67.6% in the company but its ownership will decline to nearly 55% after the IPO.
The company has hired ICICI Securities Ltd and Bank of America Merrill Lynch as the global coordinators and book running lead managers for the upcoming IPO. CLSA India, Deutsche Bank, Edelweiss Financial Services, HSBC, IIFL, JM Financial, SBI Capital Markets and UBS are the book running lead managers for the offer while Karvy Computershare has been appointed the registrar.
Insurance IPOs are expected to gain momentum in the coming months as the Insurance Regulatory and Development Authority of India (IRDAI) has indicated it will soon modify guidelines that will facilitate stock market listing of insurance companies. Since March 2016, foreign partners are allowed to own up to 49% in insurance entities in India, up from the earlier limit of 26%. This relaxation in foreign direct limit has also encouraged companies to go for stock offerings, as most life insurers are partly foreign-owned.
ICICI Prudential IPO to set precedence for others
HDFC Standard Life – a competitor of ICICI Prudential Life – was also planning to bring IPO but its plans were scuttled by its proposed merger with smaller rival Max Life. Several other insurance parents are looking to sell some stake and get their insurance arms listed on the bourses. This list includes SBI Life Insurance, Canara HSBC Oriental Bank of Commerce Life Insurance, Aviva India Life Insurance, and Max Bupa Health Insurance. A good show by ICICI Prudential IPO can very well improve sentiments for other IPO candidates.