I-Sec row: ICICI Prudential books ₹97-crore loss, repays investors

Suresh P Iyengar Mumbai | Updated on August 28, 2018 Published on August 28, 2018

Complies with SEBI’s direction to return ₹240 crore with 15% interest

To comply with market regulator SEBI’s direction, ICICI Prudential Mutual Fund has booked a loss of ₹97 crore by selling 4.61 million shares of ICICI Securities (I-Sec) stocks below its IPO subscription price of ₹520 a share and repaid investors with 15 per cent interest last Friday.

The country’s largest asset management company had sold I-Sec shares at between ₹325 and ₹330 apiece earlier this month.

The regulator had advised the AMC to repay ₹240 crore with interest of 15 per cent a year to investors of five schemes from the date of allotment to the date of actual payment, said an official spokesperson of the AMC.

In line with norms

“The loss is borne by the AMC. We have complied with SEBI’s advise and addressed the matter to their satisfaction. We reiterate that all investments by us are carried out in line with established processes,” he added.

ICICI Pru attracted a lot of flak from SEBI for investing in the IPO of its group company ICICI Securities in two tranches of ₹400 crore on day one of the IPO and ₹240 crore on the closing day.

In a letter to ICICI Pru last month, SEBI said it is difficult to comprehend what changes in fundamentals of I-Sec during the bidding period could have caused I-Pru to make additional bids of ₹240 crore on day three of the public offer, once a fairly large bid of ₹400 crore was already made on day one.

If not for the second tranche of ICICI Pru investment, the qualified institutional investors portion of I-Sec IPO would have remained undersubscribed despite 13 other domestic asset managers pumping in ₹840 crore.

Though ICICI Pru had made multiple bids as anchor investor and qualified institutional bidder in several IPOs such as HDFC Standard Life, SBI Life Insurance and Avenue Supermarts, its move to do so when it is not an anchor investor in the I-Sec IPO raised many eyebrows.

Lack of SEBI policy on mutual fund investments in group companies has been a bone of contention as fund houses have invested in most sought-after group company IPOs.

ICICI Pru itself had invested in two sister concerns — ICICI Prudential Life Insurance and ICICI Lombard General Insurance, while HDFC Mutual Fund had invested in HDFC Standard Life Insurance, and SBI Mutual Fund in SBI Life Insurance.

Published on August 28, 2018

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