ICICI Lombard shares spike 12% after parent ICICI Bank decides to increase stake
The Board of Directors approved an increase in shareholding in the Company, in multiple tranches up to 4.0%, out of which 2.5% will be bought by ICICI Bank, the insurer said in a statement to the exchanges on May 28.
ICICI Lombard on Monday gained the most since March 2020 on ICICI Bank stake increase. In early trade, ICICI Lombard shares were up nearly 12 percent. This comes on the back of ICICI Bank raising its stake in its listed general insurance joint venture with Lombard to beyond 50 percent, making ICICI Lombard, officially, a subsidiary. Typically, promoters raising stake in the company leads to an increase in share price.
The Board of Directors approved an increase in shareholding in the Company, in multiple tranches up to 4.0%, out of which 2.5% will be bought by ICICI Bank, the insurer said in a statement to the exchanges on May 28. ICICI Bank’s stake in ICICI Lombard stood at 48.02% at the end of March 2023.
In March, when the Reserve Bank of India (RBI) allowed ICICI Bank more time to decide its stake in the Rs 5,400 crore (market capitalisation as of May 26) insurer gained more than 3 percent.
| Period | ICICI Lombard share price change | ICICI Bank share price change |
| 1 week | 1.5% | -0.19% |
| 1 month | 1.26% | 3.08% |
| 6 months | 6.37% | 0.4% |
| 1 year | 14.69% | 26.99% |
In 2019, the Reserve Bank of India (RBI) had asked banks to reduce stake in their insurance ventures to protect the lender from the risks arising from other, non-core businesses. In September 2021, ICICI Bank reduced its stake in ICICI Lombard from 52 percent to 48 percent, and the insurer was no longer a subsidiary.
RBI had asked banks to reduce stake in their insurance arms. However, the insurance regulator was of the view that promoters have little skin in the game if they don’t have a controlling stake.
However, a month ago, the RBI allowed HDFC Bank to raise stake in its insurance subsidiary in response to a clarification sought by the bank.
ICICI Bank’s decision to raise stake in ICICI Lombard is in sync with the move made by its peer.It will still require regulatory approvals, the company said.
(Edited by : Anshul)
First Published: May 28, 2023 10:00 PM IST
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