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ICICI Lombard picks BofA Merill Lynch, I-Sec as advisors for IPO: Source

ICICI Lombard General Insurance has picked BofA Merill Lynch and group company ICICI Securities as advisors for its initial public offering, according to a source familiar with the development.

June 06, 2017 / 09:32 AM IST
 
 
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ICICI Lombard General Insurance has picked Bank of America Merill Lynch (BofA) and group company ICICI Securities (I-Sec) as advisors for its initial public offering, according to a source familiar with the development. The selection of investment bankers for the IPO is at a very early stage and more investment bankers will be chosen later, the source told Moneycontrol.

ICICI Lombard was a 65:35 joint venture between ICICI Bank, India’s second largest bank, and Canada’s Lombard till recently when Lombard sold 12.18 percent stake in the company to Warburg Pincus, IIFL Special Opportunities Fund and Clermont Group. Lombard is a group company of Fairfax Financial Holdings, promoted by India-born V Prem Watsa. This deal had valued ICICI Lombard at Rs 20,300 crore.

“Most of the banks will be same as those who managed the ICICI Prudential Life Insurance IPO but this time, fewer banks are likely to be selected,” the source said.

While there will be no fresh issue of shares, the exact quantum of divestment by the two original promoters will be decided in due course of time, bankers familiar with the development told Moneycontrol.

Besides I-Sec and BoA-ML, CLSA, Deutsche Equities, Edelweiss Financial Services, HSBC Securities and Capital Markets, UBS Securities, IIFL Holdings, JM Financial and SBI Capital Markets had also acted as managers in the ICICI Prudential IPO.

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Since I-Sec is a group company, it can’t be the left lead -- the most important banker in the entire IPO process. That mantle is most likely to go to BoA-ML. BoA-ML was the left lead for the ICICI Prudential IPO as well.

The left lead coordinates the preparation and writing of the prospectus documents and coordinates the compliance process for approval from the market regulator Securities and Exchange Board of India. Since the process has just started, investment bankers needed to market the issue will be selected later.

The listing by India’s largest general insurance company in the private sector will also mark the first public float by any general insurance company in the country.

The promoters have twin reasons to go for an IPO at this point of time, one being the record highs in the stock market which will get the company a fair valuation.

The other and arguably more compelling reason is that Fairfax is keen to promote another general insurance venture in the country and as per rules, it cannot own more than 10 percent stake in two general insurance companies at the same time. A foreign company can hold up to 49 percent stake in an insurance company. Thus because of the regulatory requirement, Lombard will be expected to shed at least 13 percent stake in the insurer.

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