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ICICI Bank will rake in as much as ₹2,099 crore, as it will be offloading a part — 7 per cent — of its current 62.95 per cent stake in ICICI Lombard General Insurance Company via the latter’s initial public offering.
Consider this: ICICI Bank’s average cost of acquisition is ₹43.62 per equity share of ICICI Lombard General Insurance while the IPO price band has been fixed at ₹651-661 per equity share.
FAL (an indirect wholly-owned subsidiary of Canada-based Fairfax Financial Holdings), the joint venture partner in the general insurance company, too will be cutting its stake from 21.92 per cent to 9.91 per cent via the IPO, which opens on September 15 and closes on September 19.
FAL’s average cost of acquisition is ₹137 per equity share of ICICI Lombard General Insurance. It will be raking in as much as ₹3,602 crore via the IPO.
The IPO is an offer for sale of up to 86,247,187 equity shares by the selling shareholders, of which, 31,761,478 equity shares are proposed to be sold by ICICI Bank and 54,485,709 equity shares by FAL.
The entire proceeds from the ‘offer for sale’ will be paid to the selling shareholders and ICICI Lombard will not receive any proceeds.
FAL is bringing down its stake as, on June 16, 2017, Oben General Insurance, an entity in which Fairfax has invested, obtained an in-principle approval from IRDAI to form an insurance company in India subject to terms and conditions mentioned in the approval letter.
One of the conditions mentioned therein required Fairfax to reduce its equity holding in ICICI Lombard to below 10 per cent. Chanda Kochhar, MD and CEO, ICICI Bank, said ICICI Lombard has reached a threshold whereby it can be independently listed. The proceeds of the offer for sale will shore up the bank’s bottomline.
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