New norms for insurance IPOs soon: IRDA
31 July 2010
The regulatory authorities will issue fresh guidelines for the public offer of shares by insurance companies will be issued soon, which will allow Indian promoters to dilute their stake or issue fresh shares to fund the capital intensive business, it was announced on Friday.
''As far as the life insurance industry IPO guidelines are concerned, the matter is very advanced and is currently with a body of SEBI (Securities and Exchange Board of India),'' J Hari Narayan, chairman of the Insurance Regulatory and Development Authority (IRDA), said at the sidelines of a FICCI conference in New Delhi Friday.
Currently, most private insurance companies are 74 per cent owned by Indian promoters and 26 per cent by a foreign insurance partner. Once the rules are notified, the Indian partners will be able to raise public equity to fund expansion.
Rules for public offers by general insurance companies will, however, take a little longer. ''As regards the non-life companies, a lot of work has to be done on valuation, and (guidelines) should be ready in a couple of months,'' he said.
Besides the state-owned Life Insurance Corporation, 22 private companies are offering life insurance policies. The general insurance sector has 21 players, including four state-owned companies.
Several private sector insurers, including Reliance Life, have shown interest in tapping the capital market.
The regulator also voiced concern at the differential charges levied by health insurers based on the mode of payment.
Narayan said a parliamentary committee in 2006 had recommended that it was necessary to regulate medical costs and impressed upon the government the need to set up a health regulator.