The Insurance Regulatory and Development Authority of India (IRDAI) is expected to soon modify guidelines that will facilitate public listing of insurance companies. The changes, currently underway are likely to set stage for a flurry of insurance IPOs.
“I am not very sure. I think there are one or two companies wanting to go for IPO. I do not know whether they have applied for clearance I do not know. We started working on some changes in the existing norms for the IPO. We will come out with those norms in a month or so,”
– T S Vijayan, Chairman, IRDAI
In an indication of the insurance sector coming of age in India, HDFC Standard Life and ICICI Prudential Life Insurance have approached the insurance regulator for IPO approvals while several other insurance parents are looking to sell some stake and get their insurance arms listed on stock exchanges. These regulatory issues will be sorted once IRDAI comes up with its updated guidelines. Apart from IRDAI, hopeful of insurance IPOs will need to secure approvals from SEBI.
India’s insurance industry attracted INR150 billion (INR15,000 crore) in investments last year after the government allowed foreign direct investment (FDI) in insurance companies to 49%. Prior to the increase, foreign partnership in insurance companies was limited to 26%. These big investments will further push listing of insurance companies in India. Last month, Standard Life increased its shareholding in HDFC Standard Life to 35% by acquiring 9% stake from HDFC. The INR1,705 crore transaction valued HDFC Standard Life at INR18,500 crore. HDFC Standard Life IPO is expected to be around INR2,000 crore in size, putting a valuation of around INR20,000 crore on the insurance venture.
A positive listing of HDFC Standard Life IPO can very well improve sentiments for other insurance IPOs. While HDFC has been planning to list its insurance venture for over a year now, SBI Life Insurance, Canara HSBC Oriental Bank of Commerce Life Insurance, Aviva India Life Insurance, and Max Bupa Health Insurance have also been keen to list themselves.