Of the total issue, ~43 lakh shares are reserved for the shareholders of ICICI Bank. The brokerage said that ICICI Lombard will continue to gain market share in the coming years due to its large distribution network.
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.
Firstly, ICICI Lombard has a first-mover advantage among private players in the non- life insurance sector to begin listing process.
Ahead of the opening of the IPO, the IPO committee of the board of directors of the company at its meeting held yesterday, 14 September 2017, finalized allocation of 2.45 crore equity shares in aggregate, to 64 anchor investors at Rs 661 per share.
India's largest private sector lender ICICI Bank now holds 28,56,05,284 equity shares, equivalent to 62.92 percent of the pre-offer paid-up equity share capital of the company and 21.91 percent stake is held by FAL (a nominee of Fairfax).
The size of the IPO is quite big with shares worth an aggregate of Rs 5700 (approximately) up for grabs.
On Thursday, the private insurer raised Rs 1,625 crore from anchor investors.
The initial share-sale offer will close on September 19.
On September 14, 2017, ICICI Lombard raised almost Rs 1625 crore from somewhat 64 anchor investors by alloting them 2.45 crore equity shares at the upper price band of Rs 661 per share. However, the issue may be a hit because it is the first general insurer to list, it said. The company has a robust payout ratio.
Analysts at NVS said, "On the basis of improving macro-economic factors and increasing insurance awareness in India, ICICI Lombard has a huge potential to increase its market share and grow in the nonlife insurance space".
It has advised investors with a long-term view to subscribe to the public offer.
Prabhudas Lilladher giving "subscribe recommendation", also expects ICICI Lombard's Return on Equity (RoE) to remain strong in the range of 18‐20% on high investment income and better operating efficiency. They mainly offer fire, engineering, hull, aviation, motor, casualty, health, travel, energy, personal accident, marine, liability, home, rural, and credit insurance products and services. For ICICI Bank group, this is the second public offer this fiscal. ICICI Lombard being the leader in the sector is well placed to benefit from this trend.
In June 2017, Fairfax made investment in Oben General Insurance that obtained an in-principle approval from IRDAI to form an insurance company in India.