ICICI PRUDENTIAL TO LET STAFF ENCASH ESOPS

Mumbai: In An unusual effort to retain talent, the country’s largest private life insurer has opened a window to let employees of the unlisted firm encash their Esops. ICICI Prudential Life Insurance has offered employees who exercised stock options the opportunity to sell shares at Rs 400 apiece.
ICICI Prudential MD Shikha Sharma confirmed to ET that the two promoters—ICICI and Prudential—have purchased shares from employees. She added that the pricing was the same at which new capital was being brought into the company by promoters. “This is a limited liquidity option provided to employees as an exit facility since the shares are not traded,” said Ms Sharma.
The purchase price translates into a valuation of Rs 56,520 crore for the private life insurer. It also means Prudential Plc would have to pay ICICI Bank Rs 12,650 crore to acquire an additional 23% stake if the foreign direct investment cap in insurance is raised. As per the valuation, ICICI Prudential is almost a fourth the size of Prudential, and its biggest overseas operation. While Prudential has the option to increase its stake in the JV to 49%, the capital will have to be brought in at market price. Extent not known The extent of share repurchase from employees is not known. However, ICICI Prudential has earmarked 3% of the capital as the Esop pool. Of this, a small portion has been repurchased. The company had introduced the stock option programme several years ago. It was offered to employees of the rank of branch manager and above. However, the buyback would not necessarily translate into windfall gains for all.

This is because the vesting price is the same at which new capital has been brought in. Although the promoters of ICICI Prudential have brought in well over Rs 4,000 crore, the paid-up capital of the company is just Rs 1,413.6 crore. After the company was valued at over $11 billion by potential investors last year, the promoters have been bringing in capital at that price. The buyback will not result in any reduction in the company’s net worth as the shares are being purchased by the promoters. It will also not lead to any financial loss to the promoters as they would be raising their stake in the company.

Source: The Economic Times