ICICI Lombard General Insurance Company (ICICIGI) is has been among the top three gainers on the BSE since the opening bell today; starting the day 10% higher at Rs.1209.85, the stock rose almost 14.5% to hit an intraday high at Rs.1256.70, not too far from its 15% UC of the day at Rs.1264.85.
The stock price rose on its announcement that the Board has 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 before 9th Sept’24.
As at 31st March 2023, ICICI Bank’s stake in ICICI Lombard stood at 48.02%.
As per rules of RBI, in insurance companies, banks can hold either less than 30% or more than 50%. Earlier, ICICI Bank wanted to being down its stake to less than 30% and then had asked time from the RBI to do so until 9th Sept’24. Now, instead of bringing down the stake, the company is increasing it to more than 50%, which will technically make Lombard its subsidiary.
Promoters hiking stake in a company always leads to an increase in the price.