ICICI Lombard — the general insurance joint venture between ICICI Bank and Canadian investor Prem Vatsa’s Fairfax Financial Holdings —could well be the first such entity to tap the capital markets through an initial public offering (IPO) which will dilute the foreign partner’s stake.
Board nod
“ICICI Bank Limited and Fairfax Financial Holdings Limited have informed ICICI Lombard General Insurance Company that they intend to partially divest equity shares of the company, held by each of them, through an IPO” according to a statement from the insurance firm. It received the board’s approval for the IPO.
”The size and other details of the offer would be determined in due course.”
ICICI Lombard could well be the first general insurance company to list on the exchanges though state-run general insurer New India Assurance and re-insurer General Insurance Company of India are also planning to take the IPO route. Both the firms have appointed merchant bankers for the purpose. Fairfax had started to the process of reducing its stake in ICICI Lombard as it eyes a new venture in the sector with former Allianz executive Kamesh Goyal.
Last month, Fairfax decided to sell 12.18% stake in ICICI Lombard to three investors — 9% to Red Bloom Investment, owned by private equity funds managed by Warburg Pincus LLC, 1.59% to Tamarind Capital Pte. Ltd, wholly owned by the Clermont Group and 1.59% to IIFL Special Opportunities Fund (1.59%) managed by IIFL Asset Management Limited.
The deal valued the general insurance company at ₹20,300 crore.
After the the transaction is completed, ICICI Bank will own 63.31% in Lombard and Fairfax 22.13%.
Fairfax had increased its stake in ICICI Lombard to 35% in 2015 by acquiring an additional 9% in a deal that valued the joint venture at ₹17,225 crore. If Fairfax wants to have stake up to 49% in the new venture it has planned, as allowed under the current FDI rules, it has to bring down its stake in ICICI Lombard to below 10%.