HDFC Life's offer sees better demand than other insurance IPOs
ET Bureau|
Updated: Nov 10, 2017, 08.58 AM IST
The Rs 8,695-crore initial public offer of HDFC Standard Life Insurance Company was subscribed 4.9 times on the last day of the issue on Thursday . The offer of HDFC Standard Life was the fifth insurance IPO this year after those of ICICI Lombard General Insurance Co, SBI Life Insurance Co, New India Assurance Co and General Insurance Corporation of India. Other IPOs had garnered subscription of 1.2-3.6 times.
The issue, which was priced at Rs 275 to Rs 290 per share, got bids for 107.5 crore shares against 21.97 crore shares (excluding the shares allotted to anchor investors). The company had raised Rs 2,322 crore from anchor investors including Singapore's sovereign wealth fund Temasek, Norwe gian fund Norges, Fidelity, Kuwait Investment, T Rowe Price and JP Morgan, among others.
The qualified institutional buyers' and high net-worth individuals' categories were subscribed 16.6 times and 2.28 times, respectively. The retail investors' category was subscribed 0.9 times. The employees' portion was subscribed 1.2 times and the shareholders category was subscribed 0.3 times. “Because of the HDFC name, it may list at a marginal premium. However, it is expensive at 4.5 times embedded value,“ said G Chokkalingam, founder, Equinomics Research and Advisory . “It is a great stock for the long-term, but in the short to medium term, it does not leave much on the table for investors.“
The IPO comprised sale of 19.12 crore shares or 9.55 per cent stake by HDFC Ltd and up to 10.86 crore shares or 5.42 per cent stake by Standard Life Mauritius. It included reservation of up to 21.44 lakh shares for HDFC Life employees, a reservation of up to 8.05 lakh shares for eligible HDFC employees and reservation of up to 2.99 crore shares for HDFC shareholders.
Morgan Stanley, Nomura Financial Advisory and Securities (India), HDFC Bank, Credit Suisse Securities (India) and CLSA India were the global co-ordinators and book running lead managers of the IPO. Edelweiss Financial Services, Haitong Securities, IIFL Holdings and UBS also managed the issue.
“Factoring the parentage brand of Rs HDFC', strong corporate governance and better than industry VNB (value of new business) margins along with high dividend payouts, we believe valuations are reasonable,“ said ICICIdirect.
The issue, which was priced at Rs 275 to Rs 290 per share, got bids for 107.5 crore shares against 21.97 crore shares (excluding the shares allotted to anchor investors). The company had raised Rs 2,322 crore from anchor investors including Singapore's sovereign wealth fund Temasek, Norwe gian fund Norges, Fidelity, Kuwait Investment, T Rowe Price and JP Morgan, among others.
The qualified institutional buyers' and high net-worth individuals' categories were subscribed 16.6 times and 2.28 times, respectively. The retail investors' category was subscribed 0.9 times. The employees' portion was subscribed 1.2 times and the shareholders category was subscribed 0.3 times. “Because of the HDFC name, it may list at a marginal premium. However, it is expensive at 4.5 times embedded value,“ said G Chokkalingam, founder, Equinomics Research and Advisory . “It is a great stock for the long-term, but in the short to medium term, it does not leave much on the table for investors.“
The IPO comprised sale of 19.12 crore shares or 9.55 per cent stake by HDFC Ltd and up to 10.86 crore shares or 5.42 per cent stake by Standard Life Mauritius. It included reservation of up to 21.44 lakh shares for HDFC Life employees, a reservation of up to 8.05 lakh shares for eligible HDFC employees and reservation of up to 2.99 crore shares for HDFC shareholders.
Morgan Stanley, Nomura Financial Advisory and Securities (India), HDFC Bank, Credit Suisse Securities (India) and CLSA India were the global co-ordinators and book running lead managers of the IPO. Edelweiss Financial Services, Haitong Securities, IIFL Holdings and UBS also managed the issue.
“Factoring the parentage brand of Rs HDFC', strong corporate governance and better than industry VNB (value of new business) margins along with high dividend payouts, we believe valuations are reasonable,“ said ICICIdirect.
