ICICI Prudential Life's Rs 6,057 cr IPO: Key facts you need to know

ICICI Prudential Life Insurance’s Rs 6,057 crore IPO, the first public offering by an Indian insurer, has hit the primary market starting today in a price band of Rs 300-334 per share. This will be the country’s second biggest IPO in terms of size after the Coal India public issue, which raised Rs 15,000 crore via the capital market route in 2010. [caption id=“attachment_1060845” align=“alignleft” width=“380”]  Reuters[/caption] The private life insurer, majority owned by ICICI Bank, has already raised Rs 1,635.33 crore from the 40-odd anchor investors on Friday, with some of the marquee names such as Morgan Stanley, Goldman Sachs, Nomura, Government of Singapore, UTI MF and HDFC Standard Life, among others. While the IPO closes on 21 September (Wednesday), below are some of the interesting facts about the insurer that investors can go through before putting in their bids. 1) The public offer comprises of up to 18,13,41,058 equity shares of ICICI Prudential Life Insurance Company, including a reservation of up to 1,81,34,105 equity shares (10 percent of the offer) for the shareholders of ICICI Bank. The offer would constitute 12.63 percent of the company’s post-offer paid-up equity share capital. The parent ICICI Bank holds 67.52 percent while Prudential Corporation Holdings owns 25.83 percent stake in the company. The company offers range of life insurance, health insurance and pension products & services. 2) In November 2015, ICICI Prudential sold 6 percent stake to Azim Premji and Temasek Holdings for Rs 1,950 crore, which then valued the company at Rs 32,500 crore. Currently, at the upper end of the price band of Rs 334 a share, the insurance company is now valued at Rs 47,857 crore, which is 3.4 times its embedded value as of March 2016. 3) Of the country’s 23 private sector life insurance entities, ICICI Prudential Life’s market share stood at 21.9 percent in FY16 as against 16.1 percent in FY12. During the quarter ended June 30, 2016, market share among all insurance companies in India and among private sector life insurance companies in India was 11.2 percent and 23.3 percent, respectively, a Moneycontrol report said. 4) The private life insurer’s gross premium income in the last fiscal (2015-16) jumped by 25.2 percent to Rs 19,164.4 crore on year and 23.16 percent in FY15 to Rs 15,306.6 crore, respectively. In the first quarter of the current fiscal year (2016-17), the company’s gross premium income stood at Rs 3,560 crore, up 14.4 percent over Q1FY16. Last financial year, the company’s profit rose by just 0.75 percent on year at Rs 1,652.7 crore as against 5 percent to Rs 1,640.35 crore in FY15. In the quarter ending 30 June 2016, profit was up 2 percent at Rs 405 crore over the first quarter of FY16. 5) The company’s claims settlement ratio for individual death claims improved to 96.2 percent in FY16, which is the highest compared with nearest private sector competitor. The insurer has been paying annual dividends since fiscal 2012, while it has declared an interim dividend of 1.10 per share and a special dividend 1 per share for the quarter ended June 2016. 6) For ICICI Pru Life, unit linked insurance products accounted for 82.6 percent of retail annualised premium equivalent in FY16 and 75.2 percent in Q1FY17. Its annualised premium equivalent from unit linked insurance products increased from Rs 2,210 crore in FY14 to Rs 4,179 crore in FY16, the Moneycontrol report said. As of June 2016, it had Rs 1.09 trillion of assets under management. 7) As of June 2016, ICICI Pru Life had 1,24,155 individual agents and as of 12 July, bank partners had 4,606 branches, with Maharashtra, Gujarat, Karnataka, Tamil Nadu and Delhi accounting for over 55 percent and 56.1 percent of total received premium from new business retail policies in FY16 and the three months ended June 2016, respectively. 8) However, select brokerages feel ICICI Life’s valuations appear stretched and the share sale may not offer much of a listing gains. Kotak Institutional Equities, an arm of Kotak Securities Ltd, values ICICI Pru at Rs 41,000 crore or Rs 285 a share, which is 5-16 percent lower to the IPO price band, a Mint report said. Angel Broking with a neutral rating on the IPO believes all the positives are priced in. “While the firm has enough scope for business growth in future, we believe the issue is fully priced in and, hence, we have a neutral rating on the issue,” Mint report quoted Angel Broking’s analyst Siddharth Purohit as saying. Data contribution by Kishor Kadam