Tepid trading debut by India’s ICICI

MUMBAI: India’s ICICI Lombard General Insurance fell as much as 3.4% in its market debut after raising US$871 mil in an initial public offering (IPO), amid worries about valuations for the country’s top private non-life insurer.

The weak debut cast doubts about the potential performance of a slew of upcoming insurer listings this year, including SBI Life Co Ltd, which raised US$1.3 bil last week in India’s biggest IPO in seven years.

These insurers have attracted strong investor demand: ICICI Lombard was nearly three times susbcribed, allowing it to raise 57 billion rupees, about US$871 mil, while SBI Life was 3.5 times subscribed. But some investors have cited concerns about valuations, with analysts estimating the IPO valued ICICI Lombard, the first company to list from the local non-life insurance sector, at a price-to-book value of eight times.

Chintan Gupta, a research associate at local brokerage Way2Wealth, said ICICI Lombard was expensively priced, but added the insurance business still has low penetration levels in India and thus has a strong outlook from a long-term perspective.

“Currently due to the high liquidity in the market, companies are pricing themselves at a higher premium,” Gupta said. “However, from a long-term perspective it still is a good investment.”