ICICI bank stock in focus after it plans to buy additional 2% stake in its subsidiary ahead of IPO

A leading Indian asset management firm, known for its extensive investment products and services, is making significant corporate moves. Let’s dive into a recent filing for an initial public offering (IPO), which involves a major stakeholder selling a portion of its holding and a separate entity acquiring additional shares to preserve its controlling interest.

ICICI Bank Limited’s stock, with a market capitalisation of Rs. 10,20,673 crores, fell to Rs. 1,426.60, declining by up to 1.06 percent from its previous closing price of Rs. 1,442. However, the stock over the past year has given a return of 14.6 percent.

What happened?

ICICI Bank has announced that its subsidiary, ICICI Prudential Asset Management Company, has filed a Draft Red Herring Prospectus (DRHP) for an initial public offering (IPO), which includes an offer for sale of up to 10 percent of the company’s equity shares held by Prudential Corporation Holdings Limited (PCHL).

Additionally, ICICI Bank has signed an agreement with PCHL expressing its intention to buy up to 2 percent of the company’s pre-IPO share capital before the IPO takes place. These plans are subject to market conditions, final agreements, regulatory approvals, and other factors.

IPO Company Details

ICICI Prudential Asset Management Company, a leading player in the financial and insurance services industry, is preparing for its IPO. As of March 31, 2025, the company reported total assets of Rs. 4,384 crore, a turnover of Rs. 4,980 crore, and a profit after tax of Rs. 2,651 crore in FY2025, reflecting its strong financial performance.

ICICI Bank, which currently holds a 51 percent stake in the company, plans to purchase up to an additional 2 percent equity before the IPO to maintain its majority ownership, especially as the company grants stock-based compensation to employees. The transaction, classified as a related-party transaction, will be conducted at arm’s length, and the bank does not have any promoter interest in the subsidiary.

The acquisition is in line with ICICI Bank’s existing business, as the asset management company forms part of its financial services ecosystem. The consideration for this share purchase will be in cash, with the price to be determined later. The bank will complete this acquisition before the IPO launch, subject to necessary regulatory approvals from the Reserve Bank of India (RBI). Overall, this move ensures that ICICI Bank retains control of its key subsidiary while supporting the company’s growth and public listing plans.

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Q4 Key Highlight

The company reported a healthy 18 percent year-on-year (YoY) growth in profit after tax, reaching Rs. 12,630 crore in Q4FY25. Net interest income (NII) also grew steadily, rising by 11 percent YoY from Rs. 190.93 crore in Q4FY24 to Rs. 211.93 crore in Q4FY25, and up 4 percent quarter-on-quarter (QoQ) from Rs. 203.71 crore in Q3FY25. Provisions stood at Rs. 891 crore, accounting for 0.27 percent of average advances, indicating controlled asset quality pressure. Deposits rose 14 percent YoY and 5.9 percent QoQ, while domestic loans grew by 13.9 percent YoY and 2.2 percent QoQ, reflecting steady business momentum.

On the asset quality front, the Net NPA ratio improved to 0.39 percent as of March 31, 2025, compared to 0.42 percent in the previous quarter. Net NPA additions declined significantly to Rs. 1,325 crore in Q4FY25 from Rs. 2,693 crore in Q3FY25, showing better asset quality management. However, the provision coverage ratio slightly reduced to 76.2 percent from 78.2 percent in the previous quarter but remains strong. Overall, the company delivered consistent growth in profitability and loan book while improving asset quality metrics sequentially.

Written By Fazal Ul Vahab C H

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