HDFC Standard Life gets board approval to launch IPO process; HDFC to sell 10%

IN A move that could lead to the first listing of an insurance company at the stock exchanges in India, HDFC Standard Life on Tuesday announced that the board of directors of the insurance major have approved to initiate IPO process wherein the parent HDFC Ltd would sell 10 per cent stake.

While the pricing of the issue is yet to be worked out, a rough calculation based on the valuation of the recently concluded 9 per cent stake purchase by Standard Life in HDFC Life Insurance shows that the 10 per cent stake sale could fetch the company around Rs 2,000 crore. For the 9 per cent stake, the foreign insurer agreed to pay Rs 1,705 crore, valuing the company at Rs 18,951 crore.

In a regulatory filing, Housing Development Finance Corporation Limited (HDFC) said the Board of Directors of its nonlisted subsidiary, HDFC Standard Life Insurance Company Limited (HDFC Life),

have approved taking steps to initiate the process for an IPO.

It further said that the IPO would be by way of an offer for sale by HDFC Ltd of up to 10 per cent of its stake in the insurance company. In a separate filing, HDFC said it has “inprinciple agreed to sell up to 10 per cent stake held in HDFC Standard Life Insurance Company Limited”.

HDFC Life said that the IPO is subject to various regulatory approvals including by insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) and capital market regulator Securities and Exchange Board of India (SEBI).

On Monday, the insurance company had reported a 4.2 per cent rise in net profit at Rs 818 crore for the financial year ended March 31, 2016 as against a net profit of Rs 786 crore in the previous year.

The total premium collection of the company rose 10 per cent to Rs 16,313 crore, HDFC Life said in a statement.

In 2000, HDFC and Standard Life launched a joint venture, HDFC Life, which was the first private life insurance company to be granted a licence to operate in India.

Now, it has become the first life insurer to launch IPO process formally although a number of other players have expressed their intention to go IPO way and get listed. The IPO is likely to take place this fiscal itself, while the markets regulator Sebi would be approached soon for filing of draft public offer documents.