PE giants eye $300m stake in ICICI Prudential

MUMBAI: Private equity heavyweights and sovereign investors including Temasek Holding, Capital International and GIC of Singapore have lined up to acquire a stake in India’s biggest private sector life insurer ICICI Prudential Life for $300 million, valuing the firm at $6 billion, said people briefed on the matter.
The fresh investment will bring down by 5% the stake of the promoters — ICICI Bank and UK’s Prudential — in the 15-year-old life insurance joint venture.India’s largest private sector bank holds 74% in the company while Prudential owns the balance.
A Bloomberg report on Wednesday evening named Paris-based asset manager Carmignac and Temasek as suitors for the stake.
ICICI Bank and Prudential have mandated Morgan Stanley and Bank of America Merrill Lynch to bring in new investors by the end of this quarter. Sources mentioned earlier said Temasek or GIC, which have placed offers, could end up with a stake given their history of shareholding and strong ties in ICICI Bank. One of the Singapore investors and another foreign fund could jointly own the shares on the offer.
The two Singapore investors are among the most active acquirers of India’s privately held, high growth assets in the past year.
Many see the fund-raising exercise as a preliminary step to take the company public even as the Narendra Modi government has enhanced the overseas investment limit to 49% from 26% in the insurance sector last year. The insurance bill, however, is yet to be passed by Parliament.
The planned stake-sale by ICICI Prudential Life, which had a 16% share of first-year premiums in 2014, follows HDFC Standard Life selling off a stake in the company. Last year, TOI first reported that tech czar and Wipro chairman Azim Premji’s investment arm was picking up a small stake in the second biggest private life insurer, HDFC Standard Life, valued at $3.3 billion.
Investors are keen on buying into the high-potential growth story of India’s life insurance market with abysmally low penetration. Industry estimates suggest that life insurance products have 3.1% reach while general insurance products have 3.9% penetration in the country. The industry’s asset under management is projected to grow at 20% despite short-term concerns over regulatory revamp.