ICICI Lombard General Insurance Co. made a muted stock-exchange debut on Wednesday with its shares listing at a slight discount to the initial public offering price before reversing the course and ending 3.1% higher.
Shares of India’s largest non-life insurer in the private sector began trading at Rs 650 apiece, down 1.6% from the issue price of Rs 661. The stock fell to a low of Rs 638.15 and ended at Rs 681.55, giving it a market capitalisation of Rs 30,939 crore ($4.7 billion).
The BSE’s 30-stock benchmark Sensex dropped 1.4%, extending losses for the seventh straight day. The Sensex has declined nearly 4% in the past seven sessions. The mid-cap and small-cap indices have lost 5.8% and 6.5%, respectively.
ICICI Lombard’s tepid start came after the IPO was covered three times with the help of institutional investors.
The IPO comprised an offer for sale of 86.24 million shares by joint venture partners ICICI Bank and Canadian billionaire Prem Watsa-led investment firm Fairfax Financial Holdings Ltd. Fairfax sold 54.48 million shares while ICICI Bank divested 31.76 million shares. Overall, the Rs 5,701-crore offering ($871 million) resulted in a 19% stake dilution.
Ahead of the IPO, ICICI Lombard had raised Rs 1,625 crore from anchor investors including the sovereign wealth funds of Kuwait and Abu Dhabi by selling 24.58 million shares at the upper end of the Rs 651-661 price band.
ICICI Lombard was set up in 2001, after the Indian insurance industry opened up to private players. It is the largest private sector non-life insurer in India based on gross direct premium income.
The company had filed its draft IPO proposal with the capital markets regulator on 14 July. The proposal was approved on 1 September.
Fairfax sold its stake because it has decided to start a new general insurance joint venture in India and needs to trim its holding in ICICI Lombard to below 10% as per regulatory requirements.
Indian regulations do not allow foreign investors to own a higher stake in two insurance companies. A foreign investor can own up to 49% of an Indian insurer.
ICICI Lombard’s IPO is the second public float by an ICICI Bank affiliate in the past year. In September 2016, ICICI Prudential Life Insurance Co Ltd launched a Rs 6,056-crore IPO, the biggest primary market offering in six years.
The IPO had received strong investor response but made a disappointing debut on the stock markets, with its shares ending almost 11% lower from the issue price of Rs 334 apiece.