(Disclosure:I am market making in the shares of ICICI Pru Life)
ICICI Prudential Life Insurance, the biggest private sector insurer, is being valued at $6 billion (Rs 38,000 crore) as per internal calculations based on the price at which employee stock options are sold. Though there’s no plan to list the firm anytime soon, the liberal Esop programme makes it a likely candidate in future.
The paid-up capital of the company increased Rs 31.6 lakh (face value) pursuant to exercise of stock options granted under the Employee Stock Option Scheme taking the paid-up capital to Rs 1,429 crore (face value) at March 31, 2014, according to the latest annual report. In 2007-08, the company had given an option to its employees to encash their Esops. At that time, employees who had exercised their stock options, sold their share at Rs 400 apiece, valuing the company at $11 billion.
According to the current valuation, ICICI Prudential is placed higher than other life insurance companies such as HDFC Life, which is valued at around Rs 18,000-20,000 crore. Prudential has the option to raise its stake in the joint venture to 49% as and when the regulations are liberalised. The foreign partner will have the option to increase its stake at a fair value.
If Prudential Plc wants to increase its stake by another 23%, it would have to bring in around Rs 7,250 crore. Around 0.2% of the company’s capital was given as part of Esop. They are allowed to grant share options up to 3% of the issued capital of the company. Many private life insurance companies had introduced the stock option programme. –from ET