Life insurers with 10-year business can go public
As per the guidelines issued by the Insurance Regulatory and Development Authority (IRDA), life insurance companies, which have been in business for over 10 years, would be eligible to come out with Initial Public Offerings (IPOs).
Besides, the promoters of the insurance companies would be permitted to offload their stake in the company. The size of the public issue by life insurance companies, however, will be decided by the IRDA.
The regulator would prescribe "the extent to which promoters shall dilute their respective holding, the maximum subscription which could be allotted to any foreign investors", said the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011.
IRDA, it added, would prescribe a lock-in period for the promoters to prevent them from exiting the company. The regulations stipulates that no life insurance company should approach market regulator SEBI for IPO without seeking prior approval of the IRDA.
The IPO guidelines for the insurance sector has been hanging fire for the past three years. After the insurance sector opened up in 2000, only 23 private companies have entered the life insurance business.
While few insurers are eligible for IPOs, the remaining would have to wait for completion of 10 years of operations.
Commenting on the guidelines, HDFC Standard Life MD and CEO Amitabh Chaudhry said, "it will take some time before companies actually come out with public issues. IRDA has given a lot of flexibility to the insurers in the guidelines."