Source : Moneycontrol.com
ICICI Bank's board has decided to transfer its holdings in its insurance and mutual fund companies to a newly created wholly owned subsidiary called ICICI Holdings. The bank holds 74% stake in the insurance companies and 51% stake in the AMC and trust company.
Joint Managing Director of ICICI Bank, Kalpana Morparia informs that their current market share stands at 10% in an overall basis, while it is at 30% in the private space. She sees the value of ICICI Holdings close to USD 7 billion. Morparia further adds that they are looking at an IPO for ICICI Holdings within the current year.
Excerpts from CNBC - TV18’s interview with Kalpana Morparia:
Q: The first question interesting ICICI Bank investors would be, now that this residual value which was so far captured in the ICICI Bank shares is going to go out to the other company, when can they see it unlocked in the form of an IPO or a share which they can see value in or trade value in?
A: As we said in the press release, we are looking to IPO this company to meet the capital requirements of both life insurance and general insurance. Over the next couple of months we will be incorporating the new company, subject of course, to all approvals, which is primarily Reserve Bank of India and IIDA and just get stock on the total capital requirements of these two companies and plan an IPO.
Q: How long do you think this entire process might take?
A: I would say that whilst we attempt to do it in about a six month period, I would give ourselves time of 6-9 months to do it; certainly we hope to do it in the current calendar year.
Q: What kind of capital requirements do you think you would have for this company?
A: We are in the process just now of ascertaining, as you know both life insurance and general insurance have exhibited very strong growth numbers both on a system wise basis as also individually. Both the companies have grown close to 100% in the nine months period, we are in the process of working out a three year plan and once we get a handle on the overall capital requirements, we will make an announcement.
Q: Specifically on the life insurance side of the business, how much do you see that growing by and what kind of market share are you aiming at?
A: Currently, our market share is just under 10% overall, close to 30% amongst the private players. The industry this year has shown phenomenal growth, it has grown upwards of 100%, we have grown around that number as well and we would expect strong growth momentum maybe not a repeat of the 100% this year but certainly 40 plus kind of growth overall for the industry.
We will grow of course much faster than that. General insurance, again this year, has grown by about 25% and with de-tariffisation we see actually a further impetus overall to growth in this industry, a whole lot of new product innovation is coming in there. Health is an important product for both these companies and therefore we expect strong growth really in this segment as such.
Q: I know it is early stages but you must have done some exercise on what the valuation of these two businesses could be?
A: A number of analysts have put a valuation range to this company, as you know ICICI bank stock is a very well researched stock. There have been valuation ranges from USD 4.5 billion to USD 7 billion in respect of the subsidiary, we will have to wait and watch what the market is priced for it.
Q: Which end do you agree to more as a management?
A: We will have to look at certain other proxies, as you know, in India we don’t have any insurance company that is listed but China lies listed sometimes ago at a very high multiple of 60 multiple to NBAP so even if we factor in whatever discount, it is still a pretty significant number and if we were to look at these kind of proxies you would be closer to the upper end of the range that the analysts have put to it. But the final result is going to come on what the market benchmark would show.