Keen to create value for its investors, ICICI Bank said on Friday it could make initial public offerings in four subsidiaries or sell stake in its insurance ventures once the government raises sectoral foreign direct investment limit.
The bank would take a call on the subject once the laws are amended to hike foreign direct investment in insurance sector from 26 per cent to 49 per cent, ICICI Bank CEO and managing director Chanda Kochhar told PTI.
This would help create value for the stake holders, she clarified while pointing out that ICICI Bank's share price had increased three times in the last six months to about Rs 750 a share. At this price, ICICI's market capitalisation is about Rs 80,000 crore (Rs 800 billion) compared to market leader SBI's about Rs 1.20 lakh crore (Rs 1.20 trillion).
"Still we are way off from the peak of over Rs 1,450," she rued but said that she would strive to do everything to add value in the group for the shareholders.
"In all these four (ICICI Prudential Life, ICICI Lombard, ICICI Securities and ICICI Home Finance) possibility exists, but nothing that we have finalised currently. So, nothing you would see immediately," she said, when asked about the time frame she envisaged in terms of monetising investment in these entities.
She, however, was non-committal on any preferential treatment for its existing shareholders in the IPOs saying they would anyway share the value unlocked from this exercise.
"As far as subsidiaries are concerned, of course over a period, we (will) clearly monetise some investment that we have made in our subsidiaries. This means we would either do IPO or watch what happens on the insurance side (clearance of government's norms to raise FDI cap for selling stake in the venture)," Kochhar said.
A bill to increase foreign direct investment cap from 26 to 49 per cent is awaiting Parliament nod.
At present, ICICI Bank holds 74 per cent stake in both life and non-life venture insurance companies.
"In terms of IPO. . . we should wait for how 26 to 49 pans out and then decide what percentage foreign (partners will hold) and so on. We will take a decision after that," she elaborated, but made it clear that time and market was not opportune for IPO in the life or general insurance ventures.
Pointing out that there was no need to take a decision on IPO in a hurry, she said the bank had enough capital and also the requirement of investible funds in these subsidiaries was very small this year.
"As I said we have enough capital to fund our growth but to fund growth of subsidiaries as well. And I think in the current market, it's not the best value and the right optimum value that they are going to get.
"I would rather wait for the market to reach a position where we get most optimum value and then look at," she added.
Image: Chanda Kochhar
