ICICI Lombard IPO: Deciding Application Size for Retail & ICICI Bank Shareholders

is relatively large IPO of ~5700 crores and also offered additional facility to retail investors who are share holders of ICICI Bank to put in two applications subject to the Rs. 2 Lac cap for retail investors.

The Retail investor who may also be share holder of ICICI Bank faces following dilemma.
1) Should retail investors put application for minimum lot of 22 shares or for more?
2) Should ICICI Bank shareholders put application for minimum lot of 22 shares or for more?
3) Should ICICI Bank shareholders put large application ( > Rs. 2 Lacs) to the extent that he cannot participate in retail ?

Related Posts
1. ICICI Lombard IPO review: On a Strong Turf but fully priced
2.  ICICI Lombard IPO: Brokerage Views & Run up to IPO

Additional Bid by ICICI Bank Shareholders 

Bids by ICICI Bank Shareholders in ICICI Bank Shareholders Reservation Portion (subject to the Bid Amount being up to ₹ 200,000) and in the Net Offer portion shall not be treated as multiple Bids. To clarify, an ICICI Bank Shareholder bidding in the ICICI Bank Shareholders Reservation Portion above 200,000 cannot Bid in the Net Offer as such Bids will be treated as multiple Bids.

Thus an ICICI share holder who desires to apply in this IPO has option to:
a) Put in application under Retail category and also an application under ICICI Bank shareholders quota subject to cap of Rs. 2 Lacs
b) Put in an application of any amount (> Rs. 2 Lacs) in ICICI share holder quota only.
As shall become clear subsequently Option a) is better

Allotment Procedure for ICICI Bank Share Holders

  • If the aggregate demand in this category is less than or equal to Equity Shares under this shareholders quota, full allocation shall be made to the ICICI Bank Shareholders.
  • If the aggregate demand in this category is greater than Total Equity Shares the allocation to the ICICI Bank Shareholders Category, then the maximum number of ICICI Bank Shareholders who can be Allotted the minimum Bid Lot will be computed by dividing the total number of Equity Shares available for Allotment to ICICI Bank Shareholders by the minimum Bid Lot (“Maximum ICICI Bank Shareholders Allottees”). The Allotment to the ICICI Bank Shareholders will then be made in the following manner:
    (a) In the event the number of ICICI Bank Shareholders who have submitted valid Bids in the Issue is equal to or less than Maximum ICICI Bank Shareholders Allottees, (i) all such ICICI Bank Shareholders shall be Allotted the minimum Bid Lot; and (ii) the balance available Equity Shares, if any, remaining in the ICICI Bank Shareholders Category shall be Allotted on a proportionate basis to the ICICI Bank Shareholders who have received Allotment as per (i) above for the balance demand of the Equity Shares Bid by them (i.e. who have Bid for more than the minimum Bid Lot).
    (b) In the event the number of ICICI Bank Shareholders who have submitted valid Bids in the Issue is more than Maximum ICICI Bank Shareholders Allottees, the ICICI Bank Shareholders (in that category) who will then be Allotted minimum Bid Lot shall be determined on the basis of draw of lots.
Estimates of ICICI Lombard IPO subscription & earlier response to ICICI Pru IPO
Comparison of Shares Available in ICICI Lombard & ICICI Pru IPO
ICICI  Lombard  ICICI Pru Life
Total No. of Shares 8,62,47,187 18,13,41,058
IPO Price 661 334
Total Issue Size in Rs. 57,00,93,90,607 60,56,79,13,372
Miniimum Lot 22 44
Retail – shares offered (No.) 2,86,77,190 5,71,22,434
Retail – Shares offered (in Rs.) 18,95,56,22,590 19,07,88,92,956
ICICI Shareholders quota  – shares offered (No.) 43,12,359 1,81,34,105
ICICI Shareholders quota- shares offered (  Rs.) 2,85,04,69,299 6,05,67,91,070
%  of Total  Shares offered to ICICI Shareholders 5.000% 10.000%
  • The size of both issues is almost similar (57:60)
  • ICICI Bank Shareholder quota in ICICI Lombard IPO is only ~5% compared to reservation of 10% in ICICI Pru Life IPO

ICICI Pru Life : Subscription Details
Category No. of Applications No. of Shares applied Subscription x times Amount in Rs.
Retail Investors 10,50,311 7,80,94,808 1.37 26,09,24,94,670
Non-Institutional  1,653 69,83,93,124 28.53 2,36,95,20,99,084
QIB 159 38,61,18,832 11.83 1,28,96,53,59,688
Anchor Investors 69 5,06,40,128 1.03 16,91,38,02,752
ICICI Bank Shareholders  77,153 21,87,94,840 12.07 73,07,04,67,065
Total 11,29,345 1,43,20,41,732 7.9 4,81,99,42,23,259

In ICICI Pru Life IPO Life,  ICICI shareholder quota saw significant demand while retail got full allotment as application wise the retail category was subscribe .85x times only. The allotment ratio for ICICI shareholders in  ICIC Pru Life IPO  is shown below:

ICICI Pru Life IPO: Allotment under ICICI Bank Share Holders quota
Shares Alloted Applications  recvd Shares Allotted per Applicant Ratio of Allotment
44 25,356 44 19:227
88 10,616 44 39:233
132 5,862 44 57:227
176 2,956 44 71:212
220 2,911 44 41:98
264 2,358 44 118:235
308 2,478 44 75:128
352 632 44 83:124
396 403 44 40:53:00
440 1,462 44 36:43:00
Total Applications 55,034

In ICICI Pru Life IPO , allotment was on proportionate basis in the category of  ICICI Shareholders and as the category saw high demand, the allotment ratio was quite poor. However now for ICICI Lombard the allotment intends to give first priority to minimum lot applicants. 

ICICI Lombard IPO: Broad  Estimate of  Allotment Possibility to Retail
Actual No. of Retail Applicants – ICICI Pru Life IPO 10,50,311
Actual No. of  Retail Applicants – Capacit’e Infra (Latest IPO) 14,20,000
Estimated Applicants who may apply for ICICI Lombard  IPO 12,00,000
Amount in Rs. Based on Minimum Lot fo 22 shares 17,63,52,00,000
% of Retail Quota 0.92
  • No. of applicants in ICICI Lombard  IPO is constrained by the fact that it is commanding very low grey market premium(same as ICIVI Pru Lfe IPO at time of Issue)  and many other IPO like SBI Life and just concluded Capacit’e Infraprojects Limited IPO may limit attraction and funds availability with investors.
  • Thus if above estimates hold true all retail could get a minimum lot in the IPO.
  • Considering the premium that this issue is commanding there is not much marginal gain by applying for large amounts under retail and trying o get a slightly higher allotment than the minimum lot.
  • Those who are very keen to have more allotment can put application above minimum lot and may get some more shares in case of a average response to the issue. For normal investors this does not hold much lure and minimum lot appears ok.
Broad Estimation of  Allotment Possibility to ICICI Bank Share Holders
ICICI Lombard ICICI Pru Life(actual)
Approximate No. of ICICI Bank (Retail ) Shareholders 893180
Estimate of % of ICICI Bank shareholders who may  apply for ICICI Lombard  IPO in their quota 10%
No of applications-(estimated) based on 10% response 89318 55034
Minimum Lot 22
Total  No. of Shares applied at minimum lot lvl (considering 1 min lot by each ICICI  Shareholder) 1964996
Total No. of shares of ICICI Lombard  IPO offered to ICICI Bank Share Holders 4312359
% subscription at Minimum Lot Level(Application wise) 45.57%
  • If response in ICICI Pru Life IPO is an indication ICICI shareholder quota in ICICI Lombard  is also likely to see significant demand and may be subscribed more than 10x.(amount wise)
  • Even though there are less shares for this category in ICICI Lombard  IPO (5%) compared to ICICI Pru Life IPO (10%), the significant change in allotment procedure from proportionate basis in ICICI Pru Life now to the one favoring those who apply for minimum lot in ICICI Lombard IPO, could see allotment of minimum lot to all applicants in this category
  • This working is based on assumption that only ~10% of of ICICI Bank shareholders (retail) may  apply for ICICI Lombard   IPO. 
  • In such case those who appl
    y for shares above the minimum lot could get some shares more shares  but that being on proportionate basis may not be much.
  • Even if  20% of ICICI shareholder choose to avail this quota offer, everyone may still get a minimum lot.
  • I initially intended to apply for minimum lot both in retail & shareholder category in all my applications, but now hold some till more clarity emerges on subscription which could go down due to high pricing and the issue being sandwiched between Capacit’e Infraprojects Limited & ICICI Lombard IPOs. 

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. Above estimates and analysis are based on my reading of RHP of ICICI Lombard IPO and its interpretation which could be wrong and investors ate strongly advised to consult Qulaified & competent people or research well themselves on this issue. The above analysis is just for my learning and academic purpose and I am in no way suggesting anyone to follow this methodology and shall not be responsible for any loss on this account.

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