Shares of ICICI Prudential Life Insurance made their entry on the Indian bourses yesterday at a discount to the IPO price of INR334 (US$5) per share, despite the issue being subscribed by at least 10 times.
The shares made their debut at INR329 per share on the Bombay Stock Exchange (BSE) and at INR330 on the National Stock Exchange (NSE). They closed yesterday at INR297.65 on the BSE and at INR295.85 on the NSE, according to information posted by the two bourses.
ICICI Prudential Insurance, the biggest private-sector insurer in the country, is the first insurer to be listed in India. It launched its IPO on 19 September. At the end of the share application period, the issue was subscribed 10.48 times. The IPO reportedly raised funds totalling INR6,057 crore, the largest new share sale in India since the IPO of state-run Coal India in 2010.
IPO fully priced
Some analysts say that the IPO was fully priced and left no room for listing gains. Others say that the stock is a long-term investment play given the potential of the Indian insurance market which currently is under-penetrated.
Among them, Mr Santosh Singh, head of research in India at Haitong Securities, told the business television channel CNBC TV18 yesterday that the right valuation for the company is around 10%-12% lower than the issue price.
He said: "This is a great company, but it was priced at the upper range.
"If one is trying to make listing gains it might not be there. You have to hold this company for a longer duration."
The insurer is a joint venture of ICICI Bank and UK's Prudential. The IPO shares were sold by ICICI Bank, which after the sale, owns about 55% of the insurer's equity. Prudential, which owns about 26%, maintained its holdings.
At the end of 31 March 2016, ICICI Prudential commanded a market share of 11.3%. It has more than 500 offices with around 10,660 employees and 121,000 advisors across India.