The mega ₹6,000-crore ICICI Prudential Life Insurance IPO is hitting the street on September 19. The insurer plans to sell up to 18.13 crore shares in a price band of ₹300-334. BTVi caught up with ICICI Bank’s Managing Director Chanda Kochhar to find out the future strategy. ICICI Bank has been maintaining the stance that over a medium and a long term, it will be divesting some part of its holding in major subsidiary companies. The company rushed with the IPO plan soon after Parliament amended the IRDA Act to hike the FDI limit in the insurance sector and the IRDAI came up with the IPO guidelines.
We have seen the easing of foreign holding norms in the insurance sector recently and a number of other regulatory changes before that. Is that the trigger for going public? What opportunities are you looking at from the IPO?
We have always been maintaining the stand that over a medium and a long term, we would be disinvesting some part of our holding in major subsidiary companies. And this is really our largest subsidiary company. It is a very large player in the life insurance business. It has been the market leader since 2002 up to the number that have been declared in FY16. Once the Insurance Act was amended in 2015 and then the insurance IPO guidelines came out in December 2015, we just started work on the IPO and we are concluding that process now.
In this IPO, Prudential is not diluting any of its stakes. They are very happy with the partnership and they would continue to do so. But as you know that finally the IPO guidelines require that over a three-year period, we should take the public float to 25 per cent. In the current stage, the public float would be about 19.5 per cent. So over a period of three years, Prudential will have to dilute some part of its stake and our current understanding is that in the long-term Prudential will hold about 20 per cent of the company.
What is your strategy for market share because we have seen a big consolidation — HDFC Life and Max Life have come together. Do you have any kind of strategy and where do you see your market share in 2020?
We have a very clear articulated strategy and we will continue to follow that strategy for the business. That strategy really revolves around a few things. We have a very good customer-centric product proposition. We have one of the strongest multi-channel distribution architectures where bancassurance, direct sales, the agency force — all are very strong. We make a very good use of technology while delivering the customer proposition. Our fund performance has been very high. Then we also focus on the persistency in growth improvement, cost efficiency and so on. So we will very much continue to follow the same strategy as we go forward.
Apart from the bancassurance relationship, what other kinds of distribution networks are you looking at?
Our company has one of the strongest multi-channel distribution networks. So it is not just about bancassurance. We have the direct sales network. We have the agency network and a whole lot of use of digitisation. In fact, 92 per cent of the applications that are there really flow through the digital channel.
You are looking to expand the product business. What kind of sectors are you looking at?
So far the customers’ demand has been higher on the ULIP side and therefore we have really been creating customer-centric products. As we go forward, we believe that there is a protection gap in the country and this market is here to grow substantially. So our next round of growth will also come from protection.