ICICI Holdings to unlock value and spur growth

ICICI Holdings would be the largest private insurer and fund manager in the country and the biggest testimony to the entrepreneurial culture at ICICI Bank By Rex Mathew.

ICICI Bank has a long history of nurturing different businesses, sometimes as joint ventures, and then spinning them off as separate companies. Technology services company 3i Infotech, started as a small division of ICICI Bank to develop banking related software, and was the first to come out with an IPO.

Subsequently First Source, which was once the captive BPO of ICICI Bank and is now one of the largest BPO companies in the country, also came out with an IPO.

Finally, ICICI Bank has formally decided to shift its insurance and financial services ventures to a holding company. This company may come out with an IPO at a later stage to finance the growth plans of the various businesses under it. There was much market speculation over the last one year about such a move and was partly responsible for the spectacular rise in ICICI Bank stock price in recent months.

In terms of value, the technology and BPO services businesses floated by ICICI Bank are very small when compared to the various financial services businesses. The bank was one of the first players to enter the domestic insurance and mutual fund businesses when these sectors were thrown open to private sector players.

The fact that each of these businesses are among the biggest players in their respective segments speaks volumes about the entrepreneurial culture of ICICI Bank. That is even more surprising as ICICI has always been an organisation run by professionals without any identifiable promoter and originated as a government financial institution.

The bank has announced its intention to transfer its entire holdings in ICICI Prudential Life Insurance Company, ICICI Lombard General Insurance Company, Prudential ICICI Asset Management Company and Prudential ICICI Trust to ICICI Holdings. ICICI Bank currently holds 74-per cent stakes in the insurance businesses and 51-per cent stakes in the asset management business.