ET NowIn a chat with ET Now, Chanda Kochhar, Chairperson of ICICI Prudential Life Insurance, said that there is scope for foreign shareholdings in the company going up to 49% from the current 26% level with the IPO in the offing. She also said that the ICICI will be growing life protection business to meet huge protection gap in India.
ET Now: Can you tell us more about your IPO plan?
Chanda Kochhar: First of all on the proceeds, I think I must put the whole thought process behind the IPO in perspective. We have always said that over the medium and long term, we will disinvest some part of our holding in our major subsidiary companies and life insurance is our largest subsidiary company. After the insurance amendment act was finalised, the listing guidelines for insurance companies by IRDA came out in December 2015. We thought this being the largest company in the sector and a very large company in its own right, it deserves to be a listed company. It is in that context and in line with our long-term thinking, we started working on the IPO. After the regulatory approvals, we are now ready to launch the IPO. The proceeds that come from it are a consequence and will be decided at the bank in consultation with the bank board. Being the market leader for many years, it has got one of the strongest multi-channel distribution architecture, persistency ratios that have been going up consistently, the margin has been actually going up, especially in the last one year has gone up substantially. We focus on cost deficiency, use of technology and the fund performance has been great.
ET Now: Right now your market share within the entire private space is somewhere around 21.9% but with the combined entity of HDFC and Max, we should be seeing them as the market leaders. How do you plan to maintain your market leadership, what would be the strategy in terms of your product mix and your overall market share?
Chanda Kochhar: If you look at the numbers from 2002 to 2016, we have consistently been market leaders. We have followed a well-articulated strategy and our focus is to continue that strategy.
ET Now: Do you have any plans to change your product mix which is largely ULIP linked?
Chanda Kochhar: Yes, our product mix currently is largely unit linked that has really been the customer demand and that is where our business has grown much more. But going forward, we do believe that there is actually a huge protection gap in the country and the entire protection space will grow much more. So we will also be growing our protection business and that will be one additional driver of growth for us.
ET Now: Will consolidation also be a part of the growth strategy? Will the share of the foreign partner come down or go up?
Chanda Kochhar: As far as foreign shareholding is concerned, currently our partner has decided to stay at the current shareholding. We have a current understanding in terms of the ultimate structure where their share-holding could go down to about 20% or so, but there is nothing like inducting another foreign holder. It is not really relevant because currently with the IPO and the listing itself, that gives the opportunity for foreign players to invest in this company. So the foreign shareholding depends on how the demand is in the IPO and how the shares trade, but there is a scope of the current holding of 26% to going up to 49%. Talking about consolidation, there is nothing in the offing currently, but if there is a right opportunity at the right time and value, we are always open to evaluating.
ET Now: Can you tell us more about your IPO plan?
Chanda Kochhar: First of all on the proceeds, I think I must put the whole thought process behind the IPO in perspective. We have always said that over the medium and long term, we will disinvest some part of our holding in our major subsidiary companies and life insurance is our largest subsidiary company. After the insurance amendment act was finalised, the listing guidelines for insurance companies by IRDA came out in December 2015. We thought this being the largest company in the sector and a very large company in its own right, it deserves to be a listed company. It is in that context and in line with our long-term thinking, we started working on the IPO. After the regulatory approvals, we are now ready to launch the IPO. The proceeds that come from it are a consequence and will be decided at the bank in consultation with the bank board. Being the market leader for many years, it has got one of the strongest multi-channel distribution architecture, persistency ratios that have been going up consistently, the margin has been actually going up, especially in the last one year has gone up substantially. We focus on cost deficiency, use of technology and the fund performance has been great.
ET Now: Right now your market share within the entire private space is somewhere around 21.9% but with the combined entity of HDFC and Max, we should be seeing them as the market leaders. How do you plan to maintain your market leadership, what would be the strategy in terms of your product mix and your overall market share?
Chanda Kochhar: If you look at the numbers from 2002 to 2016, we have consistently been market leaders. We have followed a well-articulated strategy and our focus is to continue that strategy.
ET Now: Do you have any plans to change your product mix which is largely ULIP linked?
Chanda Kochhar: Yes, our product mix currently is largely unit linked that has really been the customer demand and that is where our business has grown much more. But going forward, we do believe that there is actually a huge protection gap in the country and the entire protection space will grow much more. So we will also be growing our protection business and that will be one additional driver of growth for us.
ET Now: Will consolidation also be a part of the growth strategy? Will the share of the foreign partner come down or go up?
Chanda Kochhar: As far as foreign shareholding is concerned, currently our partner has decided to stay at the current shareholding. We have a current understanding in terms of the ultimate structure where their share-holding could go down to about 20% or so, but there is nothing like inducting another foreign holder. It is not really relevant because currently with the IPO and the listing itself, that gives the opportunity for foreign players to invest in this company. So the foreign shareholding depends on how the demand is in the IPO and how the shares trade, but there is a scope of the current holding of 26% to going up to 49%. Talking about consolidation, there is nothing in the offing currently, but if there is a right opportunity at the right time and value, we are always open to evaluating.
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