ICICI Pru Life makes weak market debut after $911 million IPO

By Devidutta Tripathy and Swati Bhat

MUMBAI (Reuters) - ICICI Prudential Life Insurance Co Ltd, India's biggest private-sector life insurer, fell as much as 7.2 percent on its market debut on Thursday, as investors fretted over its high valuation and rising competition.

The weak debut after a $911 million initial public offering (IPO) - India's biggest in six years - is nevertheless unlikely to affect an IPO boom this year, analysts and bankers said, due to the company-specific factors influencing the shares. Several more deals in various sectors are planned for later in the year.

With generally lower insurance coverage than developed markets, India is seen as a bright spot for the industry. That growth potential has attracted many foreign insurers to forge joint ventures with local companies, intensifying competition.

HDFC Standard Life Insurance Co Ltd and Max Life, India's third- and fourth-biggest insurers respectively, are merging to create the nation's biggest private-sector life insurer that will overtake ICICI Pru Life.

"Competition has intensified," said G.Chokkalingam, founder of Mumbai-based research and fund advisory firm Equinomics. "(The) growth rate for the industry has come down of late and is not the same as the companies enjoyed three or four years back."

He said ICICI Pru Life's weak debut was "not surprising".

"Valuation was already quite stretched ... so it did not leave much for the investors," Chokkalingam said.

ICICI Pru Life's stock opened at 330 rupees on the National Stock Exchange and fell as low as 310 rupees, compared with its IPO issue price of 334 rupees.

The IPO, which closed last week, had been subscribed more than 10 times over.

Proceeds from the IPO went to parent ICICI Bank Ltd, which sold a 12.63 percent stake in the insurer. Britain's Prudential PLC, which owns nearly 26 percent of ICICI Pru Life, did not sell any shares in the IPO.

Both ICICI Bank and Prudential will need to lower their stakes in the insurer over the next three years to comply with a rule to have a minimum public float of 25 percent.

ICICI Pru Life's IPO was the biggest in India since that of state-run Coal India Ltd in 2010. Excluding the ICICI Pru Life sale, Indian companies have raised $1.84 billion from IPOs this year, a 75 percent jump from a year earlier, Thomson Reuters data showed.

(Reporting by Devidutta Tripathy and Swati Bhat; Editing by Christopher Cushing)