The ICICI group will be taking its two insurance companies, ICICI Lombard and ICICI Prudential, to the market. The ICICI group is also roping in a private equity investor in its business process outsourcing company, ICICI OneSource.
But ICICI Bank, India's largest private bank, will not raise money from the equity market over the next four to five years.
ICICI Lombard, the general insurance company, a 74:26 venture with Lombard of Canada, may enter the market this year itself but ICICI Prudendial, the group's life insurance arm, will take a while to go public.
ICICI Bank CEO and Managing Director KV Kamath told Business Standard last week, "ICICI Lombard has made a profit after its first full year of operation. Its RoE (return on expenditure) is 20 per cent. It can be taken to the market."
He did not rule out an initial public offering by Lombard but added, "as of now, there is no concrete plan (of making a public issue)".
ICICI Prudential, a 74:26 venture with Prudential of the United Kingdom, will take another three years from now to break even. "It is doing extremely well. Its valuation could be around Rs 5,000 crore (Rs 50 billion)," Kamath said.
ICICI Lombard has a capital base of Rs 220 crore (Rs 2.20 billion) of which ICICI Bank's contribution is Rs 160 crore (Rs 1.60 billion). The capital base of ICICI Prudential is Rs 675 crore (Rs 6.75 billion).
ICICI Bank has pumped around Rs 500 crore (Rs 5 billion) into this company. Insurance Regulatory & Development Authority guidelines require Indian promoters to dilute their stake in insurance ventures by the tenth year. However, companies are free to enter the market to dilute the promoters' stake ahead of schedule.
Outlining the plan for the group, Kamath said ICICI Securities -- the investment banking arm of the bank -- will continue to be a wholly-owned subsidiary and no partner would be inducted.
ICICI Bank's stake in Federal Bank (where it holds 20 per cent) and South Indian Bank (15 per cent) would not be diluted either. "We will continue to hold on to our investment in these two banks," he pointed out.
Kamath also ruled out any acquisition by the bank, which has an asset base of Rs 1.3 lakh crore. "The restructuring exercise for the ICICI family is complete. We have the right people, technology and business model in place.
There's no more looking around for acquisition targets. I can now relax and concentrate on business," the ICICI Bank CEO said.
In banking, the focus is on overseas operations and Kamath expects the overseas business to contribute 25 per cent of ICICI Bank's total business in three years.
It has floated subsidiaries in the UK and Canada and representative offices in the United States (New York) and Dubai. ICICI Bank also has footprints in Singapore and Bahrain now and plans to be present in Bangladesh, Sri Lanka, South Africa and Russia.
"Our greatest advantage is our extremely low cost technology. We already have a 15 per cent share of the global remittance business. Apart from financing trade and India-related businesses, we are financing non-resident Indians to buy Indian assets," Kamath said elaborating on the bank's overseas strategy.
Kamath's gameplan
- No public issue for ICICI Bank for 4/5 years
- Private equity investor for ICICI OneSource
- I-Sec to go it alone
- No dilution in stake in Federal Bank, South Indian Bank
- Overseas business to account for 25% of ICICI Bank's business in 3 years
