ICICI Lombard’s Rs 5,700-crore IPO garnered 27% subscription on Friday, the first day of the issue. The 61.7-million share offering has so far received total bids for 16.5 million shares. On Thursday, ICICI Lombard had allotted 24.5 million shares to anchor investors. The allotment was made at Rs 661 per share aggregating to Rs 1,620 crore. Some of the anchor investors include Nomura, BlackRock, HSBC, HDFC Standard Life and SBI Mutual Fund. The price band
for the IPO is Rs 651-Rs 661 per share.
At the top-end of the price band, ICICI Lombard, a joint venture between private sector lender ICICI Bank and Canada’s Fairfax Financial Holdings, will be valued at nearly Rs 30,000 crore.
The entire IPO is offer for sale (OFS) by ICICI Bank and Fairfax, who are offloading their 7% and 12% stake respectively.
“At the upper price band
of Rs 661 the issue is offered at eight times its FY17 book value (BV). While on the reported numbers it might appear to be fairly valued, we believe with strong potential to deliver high double-digit growth for next multiple years, the issue looks decently priced, and hence we have a ‘subscribe’ rating on the issue,” said Siddharth Purohit, senior equity research analyst- banking, Angel Broking in a note.
“At this valuation the issue seems expensive… In May 2017, Fairfax Financial Holdings sold 12.2% of its stake, held through a wholly-owned subsidiary FAL Corporation, valuing the company at Rs 20,000 crore (about 5.4 times its FY17 BV). The current issue valuation is at 8.1 times – a sharp increase in premium in such short span may not be justified,” said a note by Centrum.
ICICI Lombard is the second IPO from the ICICI Bank stable in the past one year. Last September, ICICI Prudential Life Insurance had come out with a Rs 6,000-crore IPO in which ICICI Bank had sold its 12.63% stake.
ICICI Lombard’s IPO closes on Tuesday.