Shares of ICICI Prudential Life Insurance plunged nearly 9% on May 18, touching a more than two-year low of Rs 488.60, after promoter Prudential plc announced plans to reduce its holding in the insurer to 10%.

The proposed stake reduction is linked to regulatory requirements tied to Prudential's acquisition of a 75% stake in Bharti Life Insurance Co..

As of March 31, Prudential held a 21.91% stake in ICICI Prudential Life. The company said it is currently in discussions with the relevant regulatory authorities regarding the timeline for the required divestment.

Post this news, ICICI Bank – another promoter of the company, said that it intends to retain a majority shareholding in the company.

Prudential entered into a share purchase agreement with Bharti Life Ventures Pvt Ltd and 360 ONE Asset Management to acquire stake in Bharti Life for a cash consideration of Rs 3,500 crore with a potential addition of Rs 700 crore

Following the stake purchase in Bharti Life Insurance and divestment in ICICI Prudential Life, Prudential will cease to be the promoter of the latter company.

At 11 am, shares of ICICI Prudential Life Insurance Co. traded over 6% lower at Rs 501.65. Over 3 million shares of the company changed hands on the NSE, nearly 19 times the number of shares traded till the same time Friday. The number of shares traded Monday was higher than the average three-month traded volume.

Insurers often lean on large banks like ICICI to reach potential policy buyers. But the target’s main attraction is Bharti Airtel’s nearly 300 million smartphone customers in India, compared with ICICI’s roughly 80 million retail banking clients, per data from Bharti and BCG Matrix. Overlapping markets in Africa could also open up other emerging markets, while the telecom company's asset management arm could help Pru reach India’s high net worth individuals, reported Reuters.

And while the deal price seems fair, it’s not a bargain, valuing the company at just over $500 million, or around 1.5 times its embedded value as of September, Reuters said. That’s in line with the average for rivals SBI Life Insurance, HDFC Life Insurance and the Life Insurance Corporation of India, per Visible Alpha, and just below 1.6 times for ICICI Prudential Life Insurance. Shareholders sent Pru’s stock down 2% in morning trade in Hong Kong.

Brokerages remained constructive on ICICI Prudential Life Insurance despite the sharp selloff triggered by promoter stake sale concerns.

Morgan Stanley said it does not see any immediate fundamental impact on ICICI Prudential Life's operations or long-term business outlook from Prudential's proposed stake reduction. The brokerage maintained its Overweight rating on the stock with a target price of Rs 670.

Nomura also retained its bullish stance, noting that the stock has been under pressure ever since media reports first indicated Prudential plc could reduce its holding. The brokerage highlighted that ICICI Prudential Life has declined 21% so far in CY26, compared with a 10?ll in the Nifty 50. Nomura maintained its Buy call with a target price of Rs 680.