ICICI Pru Life’s market debut jinxed, dips 11%
MUMBAI: ICICI Prudential Life Insurance made a weak debut on the stock exchanges, with the shares of the country’s largest life insurer closing nearly 11% below its issue price.
The stock listed at Rs 329 a share on the BSE, down 1.5% compared with the issue price of Rs 334 a share. It plunged further amid a wider market sell-off to settle at Rs 297.65, down 10.9% on the BSE.
The BSE Sensex closed down 465 points or 1.6% at 27,827.53.
The 181.3 million equity issue of ICICI Prudential Life Insurance raised ₹6,057 crore and was the largest IPO in India since state-run Coal India raised Rs 15,000 crore in 2010.
However, company chairperson Chanda Kochhar said on Thursday that the stock will outpace market growth in next few years. “The company has had the tradition of growing faster than the industry and that gives us the comfort that the company will continue (to grow faster),” she said.
ICICI Bank, which held 68% stake in the company offloaded 12.63% in the IPO via offer for sale and so the life insurance arm didn’t get any fresh funding.
ICICI’s foreign joint venture partner Prudential Corp Holdings, which holds 26% stake in ICICI Prudential Life didn’t sell any shares in the offer for sale, but will reduce its stake in the company to 20% by 2019, to enable the company meet Sebi norms, which require all listed company to at least have a 25% public float. The issue was priced in the Rs 300-334 range and was subscribed 10.5 times.
At the upper end of the price band ICICI Prudential was valued at ₹47,957 crore, significantly higher than in November 2015, when ICICI Bank sold 6% stake in the life insurance arm to Temasek and PremjiInvest at a valuation of just Rs 32,500 crore.
“The issue was aggressively priced and adequately captures the operating metrics over the near term. However, favourable demographics and strong macro opportunity makes it an interesting play for long term investors,” said Nitin Aggarwal of Antique Stock Broking.