Kuwait, Abu Dhabi sovereign funds among anchor investors in ICICI Lombard IPO

Founded in 2001 ICICI Lombard is the first non-life insurance company to file for an IPO. The initial share sale a pure offer for sale will see stakeholders ICICI Bank Ltd and Fairfax Financial Holdings Ltd sell around 86.24 million shares

The offering for sale of up to 31,761,478 equity shares by ICICI Bank Limited (promoter), and up to 54,485,709 equity shares by FAL Corporation ("FAL" or the investor selling shareholder). For ICICI Bank group, this is the second public offer this fiscal. Nearly all leading brokerages and research reports advise a "subscribe" for the IPO, and it won't be a surprise if the offer gets solid response from investors and gets decently oversubscribed.

Valuations appear a bit on the higher side, but then, if one is willing to consider the long term prospects for the sector in general and the company in particular, investing in the IPO is a good call.

Two state-run general insurers-General Insurance Corp of India and New India Assurance Company-as also two life insurance firms (SBI Life and HDFC Standard Life) have also lined up IPO plans. The insurer is looking to raise about Rs5,700 crore at the higher end of the price band, which is fixed between Rs651-661 per share. The increasing share of business from segments such as crop or weather insurance, which have a relatively lower loss ratio, will be a positive trigger for ICICI Lombard going ahead, the brokerage said. Post-issue, the shareholding of Fairfax would come down to 9.91 percent from 21.9 percent now, while the same for ICICI Bank would be reduced to 55.95 percent from the current 62.95 percent. 64 anchor investors have applied for subscription of ICICI Lombard at Rs 661 apiece at the upper end of the IPO price band. ICICI Lombard's Rs 5,700 crore IPO will give the company a valuation of Rs 30,000 crore after the issue.

The initial share sale offer would close on September 19.

In 2017, companies raised Rs 16,254 crore through IPOs.

It has advised investors with a long-term view to subscribe to the public offer. However, the issue may be a hit because it is the first general insurer to list, it said. Angel Broking, another brokerage, also has "subscribe" rating on ICICI Lombard IPO. They mainly offer fire, engineering, hull, aviation, motor, casualty, health, travel, energy, personal accident, marine, liability, home, rural, and credit insurance products and services. The entire proceeds from the OFS will be paid to selling shareholders.

The duo added, "ICICIL may attract adequate investor interest as it is the first general insurance listing, the under-penetration in the sector and the company's healthy financials".

Combined ratio of the company improved marginally from 104.9 percent in FY15 to 104.1 percent in FY17.

Compared with peers, ICICI Lombard holds the leadership in non-life insurance and has maintained it since 2004.

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