Shares of ICICI Prudential Life Insurance Company Limited (ICICI Pru) listed on the bourses and did badly. Blame it on the surgical strike, yet the performance was well below the mark and far from satisfactory.
The company had through an offer for sale sold 18.13 cr shares in a price band of Rs 300-334. The issue received excellent support and was subscribed 10.48 times. The QIB portion was subscribed 11.83 times, HNI 28.55 times, Retail 1.42 and Shareholders preferential bucket 12.20 times. This portion too was dominated by HNI’s who leveraged and applied here. Going forward in large offerings there must be a split in such bucket between HNI and retail as it is unfair to get proportional allotment when one is compared with HNI’s who are borrowing and applying. Imagine an application of Rs 200 crs compared with someone who has applied for Rs 50,000 and both get proportional. Defeats the very purpose and is most unfair.
The overall issue size was just over Rs 6,000 crs and was the largest issue since Coal India in 2010. History says that whenever there is a large issue of this kind, the listing of the issue makes a market top. Whether what we saw on Thursday was yet another instance or not only time will tell. The previous instances were Reliance Petroleum in 2006, Reliance Power in 2008 and Coal India in 2010.
The company had allotted to 38 anchor investors comprising of 69 entities a total of 4.89 cr shares. The market cap at the top end of the price band at issue price of Rs 334 was Rs 47,940 crs.
The share listed at Rs 329 on the BSE and Rs 330 on the NSE. The high was an identical Rs 333.90 on both the exchanges. This price was just below the issue price of Rs 334 and the issue price is yet to to be touched on the bourses. The share slid under pressure after the news conference of the army and made a low of Rs 295.50 and Rs 295.15 on the two exchanges. The closing price was Rs 297.65 on the BSE, a loss of Rs 36.35 or 10.88%. The closing price on NSE was Rs 297.55, a loss of Rs 36.45 or 10.91%.

The total traded volume on the exchanges was 1017.77 lakhs which was 56% of the IPO size and 77% of the non-anchor issue. Delivery volume was 403.83 lac shares which was 39.68% of the traded volume and 22.27% of the issue size. Considering non anchor the delivery volume was 30.51%. This implies that there was large liquidation at a loss from HNI’s. They had borrowed at an average of 4.5% and the cost of funding in the HNI category was Rs 8.25 and in the shareholder category was Rs 3.55. In either case they lost money.
The weighted average of the day was Rs 313.77 on the BSE and Rs 314.02 on the NSE. The closing price was a good Rs 16-17 lower or almost 5%, indicating that in the end there was panic. The company is good and the business prospects promising. Markets behave in a manner that they understand best. While the debut was poor and far from satisfactory, let us hope that things improve when the company announces its quarterly results later this month.