Skip to main content

Irdai to make listing a must for large insurers

By
SBI Life, ICICI Prudential Life and HDFC Life could lead the way
The Insurance Regulatory and Development Authority of India ( Irdai) will make it mandatory for large life insurance companies to list within a specific period. So far, none of them, barring one, has shown interest in going to public, even after completing 10 years of operations.
According to sources familiar with the developments, privatesector life insurance companies with assets under management ( AUMs) of more than Rs.60,000 crore will be the first ones that will have to list. The three largest insurance companies at present are SBI Life Insurance, ICICI Prudential Life Insurance and HDFC Life. Only HDFC Life has so far shown any inclination to list.
As on March 31, 2015, SBI Life had a total AUMof Rs.71,339 crore, HDFC Life had Rs.67,000 crore, and ICICI Prudential Life had Rs.1,00,183 crore.
According to Irdai norms, a company has to be in the insurance business for 10 years to be eligible to list on the equity market.
The regulator considers the financial performance, capital structure after offer and solvency margin, among other factors, to give its approval.
Regulatory officials said this was an enabling provision and they would use it if required. “For life insurers with huge operations, we do not want one or two partners to share the risks and returns. It should be listed so that the capital could be shared with shareholders,” an official said.
In an exposure draft ‘Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business’, Irdai said it would do so if needed.
Such a company has to, within aperiod of one year from the date of such direction, comply with the direction issued.
“The authority might direct an Indian insurance company transacting in the life insurance business to go for a public issue if the circumstance so warrants,” Irdai said in the exposure draft.
It is not clear if Life Insurance Corporation ( LIC) will come under the purview of this direction.
Being a state- owned entity, LIC’s initial public offering ( IPO) decisions will be taken by the government. However, Irdai does have the power to direct with respect to its public issue.
Though it was earlier anticipated that life insurers would bring out IPOs soon after completing 10 years in the industry, none of them did so. That was due to stress in business, low foreigndirect investment cap ( it has now been raised to 49 per cent) and poor market conditions, among other things.
Insurance officials said this was a step by the regulator to increase transparency. “ It was implicit that each life insurer would bring out an IPO after completing 10 years. However, even after 10- 12 years, only one- two companies have shown intent. The regulator wants to nudge large players to list, so that others follow suit,” said the chief executive of a private life insurer.
Earlier, HDFC had shown intent to bring out an IPO for its life insurance company, HDFC Life, though HDFC Chairman Deepak Parekh said in the company’s annual general meeting in July that an issue was at least.
Business Standard, New Delhi, 14th Sept. 2015

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more

Govt invites applications for RBI deputy governor's post, last date Nov 30

By
  The government has invited applications for the post of deputy governor of Reserve Bank of India from interested candidates with at least 25 years of experience and below 60 years of age as on January 15, 2025.One of the deputy governors, Michael Patra’s current term will end on January 15.According to an advertisement, candidates should have at least 25 years of work experience in Public Administration, including experience at the level of secretary or equivalent in the Government of India, or persons who have at least 25 years of work experience in an Indian or International Public Financial Institutions; or persons of exceptional merit and track record at the national or international level in the relevant field.The last date of submission of the application is November 30, 2024.   It has been clarified that the Financial Sector Regulatory Appointments Search Committee (FSRASC) – a body which will select the candidates- is free to identify and recommend any other person a...
Post a Comment
Read more