ICICI, Fairfax to sell up to 20% in ICICI Lombard
Fairfax will sell 13%, while ICICI Bank is looking to sell at least 7%
MUMBAI: The initial public offering (IPO) of ICICI Lombard General Insurance Co Ltd will see its founders ICICI Bank Ltd and Prem Watsa’s Fairfax Financial Holdings Ltd collectively dilute a stake of at least 20%, said two people aware of the development.
ICICI Lombard’s IPO will be the first public offering by a general insurance company.
“The IPO is a pure offer for sale. Fairfax has already sold a large chunk of its stake in the company and it will be the biggest seller in the IPO too. Together both ICICI and Fairfax are going to sell at least 20% stake in the company. Fairfax will sell 13% stake, while ICICI Bank is looking to sell at least 7%,” said one of the two people cited above, requesting anonymity as he is not authorised to speak to the media.
Fairfax has applied to the insurance regulator for a new insurance licence and as a condition it will have to bring down its stake in ICICI Lombard to under 10%, he said.
Fairfax, in May, sold a 12.18% stake in ICICI Lombard to a bunch of buyers including private equity firm Warburg Pincus LLC for around $383 million (₹2,372.5 crore). After the transaction, ICICI Bank and Fairfax have stakes of around 63% and 22% in ICICI Lombard.
According to the second person cited above, the selling shareholders expect to raise at least ₹5,000 crore, which would value the company at around ₹25,000 crore, a significant premium to the Warburg round.
The 12% stake sale by Fairfax in May valued the company at ₹20,300 crore.
“The company is expected to file its draft red herring prospectus in the next 10-15 days, with an eye on launching the IPO before the end of the calendar year,” the second person said.
Bank of America Merrill Lynch and ICICI Securities Ltd are managing the share sale.
Emails sent on Monday to Fairfax, ICICI Bank, ICICI Securities and ICICI Lombard General Insurance did not elicit any response. Bank of America Merrill Lynch declined to comment.
ICICI Lombard General Insurance is the second insurance company from the ICICI group to go public. Last year, ICICI Prudential Life Insurance Co. Ltd raised ₹6,000 crore in an initial share sale, the first public offering by an Indian life insurer. ICICI Bank sold a 12.63% stake through the IPO, which valued the life insurer at around ₹48,000 crore.
Several insurance companies, including state-owned ones, are queuing up to launch IPOs.
In April, Mint reported that New India Assurance Co Ltd and General Insurance Corp. of India Ltd (GIC) had hired investment banks to manage their IPOs as the government seeks to pare its stake in the state-run insurers.
The government is likely to raise more than ₹10,000 crore by selling its shares through the public offerings.
State Bank of India’s life insurance unit SBI Life Insurance Co Ltd is also planning to go public.
On Friday, Mint reported that the insurance regulator had approved SBI Life’s IPO application, which seeks to raise as much as ₹7,000 crore, the largest sum by a life insurer in India.
Reliance General Insurance Ltd, the non-life insurance arm of Reliance Capital, is also planning to go public, the company said last month.