Mumbai: India’s insurance regulator will soon issue valuation and disclosure rules for insurance companies making initial public offerings, its chairman told a conference on Friday.
The first wave of IPOs from India’s young private insurance sector is expected over the next year, with several of the biggest players considering going public after meeting the requirement that they be in business for 10 years.
The Insurance Regulatory Development Authority (IRDA) is working with capital market regulator Securities and Exchange Board of India to come out with disclosure guidelines by the end of this month, while valuation norms will be ready in a couple of weeks, IRDA chairman J Hari Narayan said.
“The disclosure norms pertain to information required in the red herring prospectus that insurance companies need to file while going for IPOs,” Narayan said.
The regulators are working on what the insurance firms need to disclose quarterly and annually.
India’s first foreign-backed joint ventures -- between ICICI Bank and Prudential Plc, Max India and New York Life, and Housing Development Finance Corp and Standard Life -- all will have their 10th birthdays next year and are said by insiders to be eyeing IPOs.
“A few companies have shown interest to access the market,” Narayan said, without naming the players.
In addition, Reliance Life Insurance, India’s No.4 private life insurer, is seeking a government waiver to allow its life insurance venture to launch an IPO.
Foreign joint venture partners are limited to holding 26% stakes in their Indian units, and some investment bankers have said the cap needs to be raised to 49% before such companies list.
Life insurance penetration in India is about 4% of GDP, in terms of total premiums underwritten in a year, compared with 2.4% in China and about 13.5% in the UK.
“It is for the government to decide on changes in the timeline of IPOs. We are preparing the roadmap,” Narayan said.