ICICI Prudential Life plans to sell 5% stake

Mumbai: ICICI Prudential Life Insurance has initiated a process to sell up to a 5% stake in the life insurance venture, said a person familiar with the development, adding that the process is in the early stages. He declined to be named.

Long-term investors like sovereign funds, pension funds and other financial investors have evinced interest in picking up stake in the life insurance joint venture between ICICI Bank Ltd (74%) and Prudential Plc (26%).

On Thursday, Economic Times reported that ICICI Prudential Life insurance would sell a 5% stake, pegging the valuation of the business close to Rs.30,000-36,000 crore.

An ICICI Bank spokesperson declined to comment immediately.

“The deal, if any, will only be concluded after the changes in foreign investment policy in the insurance sector are passed by both houses of parliament,” said the person quoted above, adding that the idea was to show some monetization in the business, which is now almost 15 years old. ICICI Prudential Life began operations in December 2000.

The government has passed an ordinance raising the foreign investment limit in the life insurance sector to 49% from the current 26%, but this will need to be passed by both houses of Parliament.

A number of life insurance firms are looking to establish their valuations through small stake sales in view of the increased foreign investment limits.

In December, Housing Development Finance Corp. Ltd (HDFC) sold 0.95% stake in its life insurance venture to Azim Premji Trust for Rs.198.9 crore. The deal valued HDFC Life at Rs.19,890 crore.

On 22 December, Arundhati Bhattacharya, chairperson of State Bank of India, said in an interview that the bank could consider unlocking value in some of its units, including its insurance subsidiary.

ICICI Prudential Life Insurance is the country’s largest private sector insurance company. According to the consolidated results announced by ICICI Bank on 30 January, the life insurance firm achieved a profit after tax of Rs.462 crore for the December ended quarter compared to Rs.428 crore in the corresponding quarter last year. ICICI Life maintained its leadership in the private sector, said the bank.