ICICI Lombard IPO subscribed 98% on Day 2; QIB bids over 2 times

NEW DELHI: The Rs 5,700 crore initial public offer ( IPO) by ICICI Lombard General Insurance Company, got 97.60 per cent subscription on Day 2 of the bidding process.

By 5 pm, investors bade for 6,01,87,028 shares, which was 97.60 per cent of the total issue size of 6,16,66,740 shares. The quota limit for qualified institutional investors was subscribed 2.36 times, while hat of retail individual investors (RIIs) by 0.62 times.

The general insurance company last week raised Rs 1,625 crore from 64 anchor investors to 64 anchor investors including Goldman Sachs India, Kuwait Investment Authority Fund, BlackRock, Societe Generale, Citigroup Global Markets Mauritius, Nomura Trust and Banking Co, BNP Paribas Equity Fund, HSBC Indian Equity Mother Fund and DSP BlackRock,.

Brokerage Prabhudas Lilladher said that the issue is fully priced. "At the upper end of the price band, the company trades at 46.5 times its March 2017 earnings per share (EPS) which implies that it is fully priced, the brokerage said in its pre-IPO note on ICICI Lombard, recommending ‘subscribe for long term gains’.

The company is offering 6,16,66,740 shares to public in Rs 651–Rs 661 per share price band.

Centrum Broking said that valuation looks high considering the RoE of 17.2 per cent for FY17, loss ratio of 80.6 per cent and the combined ratio of 104 per cent that is lower than the average of private peers.

However, the issue may be a hit because it is the first general insurer to list, it said. Moreover, the nonlife insurance segment is underpenetrated in India and the company’s financials are strong, it said.