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HDFC Standard Life IPO received a major boost with parent HDFC approving the listing plans for the insurance subsidiary. “The board approved taking steps to initiate the process for an IPO by way of offer for sale by the corporation, up to 10% of equity of HDFC Life,” the parent said in a regulatory filing. HDFC – a major mortgage finance company in India – owns about 61.65% in the life insurance joint venture with UK’s Standard Life. As further developments unfold, the move will result in the first stock market listing of an insurance company in India.
“The plan is to do this divestment in the second part of the calendar year,” said Keki Mistry, vice-chairman and CEO of HDFC while adding that the company has not yet hired any investment bank for the public offer. HDFC Standard Life IPO will still need to get regulatory clearances from the Securities and Exchanges Board of India (SEBI) and the Insurance Regulatory Development Authority of India (IRDAI).
While pricing of HDFC Standard Life IPO is yet to be decided, the life insurance company may be valued at INR20,000 crore. Accordingly, the IPO is expected to be around INR2,000 crore in size. Earlier this month, Standard Life increased its shareholding in the venture to 35% by acquiring 9% stake from HDFC. The INR1,705 crore transaction valued HDFC Standard Life at INR18,500 crore.
HDFC has been planning to list the insurance venture for over a year now. Last year, Mistry said HDFC was aiming to raise INR2,400 crore by diluting 10% stake but its original plan to bring the IPO by September 2015 is long delayed.
HDFC Standard Life IPO to set precedence for others
Several other insurance parents are looking to sell some stake and get their insurance arms listed on the bourses. This list includes SBI Life Insurance, Canara HSBC Oriental Bank of Commerce Life Insurance, Aviva India Life Insurance, and Max Bupa Health Insurance. A good listing of HDFC Standard Life IPO can very well improve sentiments for other IPO candidates.
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