ICICI Prudential AMC IPO: GMP hits new high after allotment; what to expect on listing

ICICI Prudential AMC IPO: A day before its stock market listing, shares of ICICI Prudential Asset Management Company have been soaring high in terms of grey market premium (GMP). The issue, which saw a strong demand during the bidding phase, hit a new high in the unofficial market on Thursday.

Last heard, ICICI Prudential AMC IPO was commanding a grey market premium of Rs 440-450 apiece, suggesting a listing pop of 20-21 per cent over its issue price of Rs 2,165. However, its premium in the unofficial market stood around Rs 300-350 since the closure of the issue.

The IPO of ICICI Prudential AMC ran for bidding between December 12 and December 16. It had offered its shares in the price band of Rs 2,061-2,165 per share with a lot size of six shares. It raised a total of Rs 10,602.65 crore via IPO. It became the fourth most-subscribed public issue in India and fetched more applications than Tata Capital and HDB Financial Services.

The issue was overall subscribed a total of 39.17 times, attracting bids nearly Rs 2.97 lakh crore through more than 55.07 lakh applications. On an individual basis, the portions for QIBs were subscribed 123.87 times and the non-institutional investors (NIIs) were booked 22.04 times. The allocations for retail investors and shareholders were subscribed 2.53 times and 9.75 times,

"With strong pedigree of ICICI Bank and Prudential, robust digital adoption and low concentration risk across schemes, we believe ICICI Pru AMC could command a premium valuation multiple than its peers. Given its dominant market position and long-term tailwinds from financialization of household savings," said Prashanth Tapse, Senior VP of Research at Mehta Equities.

"We recommend investors to 'hold for the long term' after listing. For non-allotted investors, we advise against chasing the stock on listing day and suggest waiting for more reasonable entry levels post listing, as near-term volatility or price consolidation cannot be ruled out amid cautious market sentiment," he adds.

Even before its listing, PL Capital has initiated coverage on the ICICI Prudential AMC, expecting nearly a 39 per cent upside in the stock from its IPO price. It has given it a 'buy' rating with a target price of Rs 3,000 apiece saying that the company may eventually command a premium to HDFCAMC due to better distribution and diversification while having similar profitability.

"We are optimistic about its business prospects given its strong performance/parentage which is driving the highest net equity flow market share among AMCs; its superior equity yields of 67 bps due to lowest distributor payout; it accounts for 73.7 per cent of MF sales of ICICI Bank; and a higher share of non-MF revenue at 9.2 per cent among peers," PL Capital added.

Citigroup Global Markets India, Goldman Sachs (India), ICICI Securities, Morgan Stanley India, BofA Securities, Avendus Capital, Axis Capital, BNP Paribas and CLSA India are among the 18 the book running lead manager and Kfin Technologies is the registrar of the issue. Shares of the company shall be listed on both BSE and NSE on December 19, Friday.