Promoters to dilute 19% in ICICI Lombard IPO

Mumbai: Largest private sector non-life insurer ICICI Lombard on Friday said promoter entities - ICICI Bank and Farifax Holdings -- will dilute their holdings by close to 19 percent through a public offer that will hit the markets on September 15 and mop up around Rs 5,700 crore.

With the IPO being carried out through offer for sale (OFS) route -- as the company is not issuing any fresh equities - ICICI Lombard will become the first general insurer to go public.

The merchant bankers have fixed a price-band in the range of Rs 651-661 for the issue, which will open for subscription on September 15 and closes on September 19.

ICICI Lombard is a joint venture between ICICI Bank and Canadian NRI Prem Watsa-promoted Fairfax Financial Holdings.

For ICICI Bank, this is the second public offer from group this fiscal. Its life insurance arm ICICI Prudential earlier this year raised Rs 6,000 crore via an IPO.

Through the upcoming IPO, these promoters will dilute up to 86,247,187 equity shares with a face value of Rs 10 each of ICICI Lombard. Post-issue, the shareholding of Fairfax will come down to 9.91 percent from 21.9 percent now (11.99 percent dilution), while ICICI Bank's will come down by 7 percentage points to 55.95 from 62.95 percent.

The issue is likely to fetch Rs 5,700 crore for the promoters and the proceeds will go the promoters.

Two state-owned general insurers -- New India Assurance and the re-insurer GIC Re -- are also in the process of going public apart from two life insurers, SBI Life and HDFC Standard Life.

"The company is now at a threshold where listing will give a positioning," Chanda Kochhar, managing director and chief executive of parent ICICI Bank, told reporters on Friday while launching the IPO roadshow here.

"The proceeds of the issue will add to profitability of the bank," as the proceeds of the IPO will go to the parent organisations, she added

Commenting on the listing process, Bhargav Dasgupta, chief executive of ICICI Lombard, said the company's combined ratio as of end June was 102.4 percent and hence there was no immediate requirement of capital.

The claim ratio of the company currently stands at 80 percent, he said, adding, "Around 15-20 percent growth rate in the overall premium was expected for the industry for the current fiscal."

ICICI Securities, Bank of America Merrill Lynch and IIFL are the bankers to the issue.

Issue earlier this week, ICICI Lombard had got the Sebi approval to launch the issue.