(Disclosure:I am market making in the shares of ICICI Pru Life)
ICICI Bank and Prudential Plc are looking to sell at least a 5% stake in their insurance joint venture, ICICI Pru Life, to financial investors such as private equity firms and sovereign wealth funds, in anticipation of Parliament clearing the ordinance raising the foreign investment cap in the sector to 49%.
Morgan Stanley and Bank of America Merrill Lynch (BofAML) have been mandated by ICICI Prudential Life — which is running the process — to bring in investors, said multiple sources aware of the possible transaction. Most see this exercise as an attempt to discover a valuation for a planned IPO in the near future or to discover a price at which Prudential Plc could increase its stake in the venture, India’s largest private life insurance company by sum assured and premium income. ICICI Pru ..
ICICI Prudential is present in 489 locations in India through 559 branches as of March 31, 2014 with over 5,000 partner points of presence. Bancassurance or distribution by banks accounted for 61.2% of the total business. Its market share as of December end was 11.4%. “This is part of the journey to establish price as there are no benchmarks in the industry,” said Alpesh Shah, partner, BCG.
The paid-up capital of the company is Rs 1,429 crore and its net worth stood at Rs 5,144 crore as on December 31, 2014. ICICI Pru Life had a profit after tax of Rs 462 crore in the third quarter of 2014-15 compared to Rs 428 crore in the same period last year. For the April-December period, profit after tax was at Rs 1,243 crore while premium income from new business was at Rs 3,585 crore.
The company has seen an increase in its market share to over 11% during the nine months to December 2014. Its product mix is skewed more towards unit-linked insurance plans, which is largely on the back of the rising stock market. Till December-end, the company used to manage assets worth Rs 94,593 crore. The total sum assured by ICICI Pru Life, including the group insurance business, increased by 9.5% from Rs 2.75 lakh crore at March 31, 2013 to Rs 3.02 lakh crore on March 31, 2014. –from ET