New Delhi: Reliance Capital, which is seeking a government waiver to allow its life insurance venture’s IPO, expects a decision later this month, its chief executive said on Tuesday.
Sam Ghosh said the unit would be considering roping in a strategic investor if the IPO fails to materialise.
Indian insurance firms have to be in business for at least a decade before they are allowed to list. Reliance Life Insurance has asked for a waiver from the finance ministry so it can go public.
“The process is on and we’ve been told that by later this month we’ll get to know,” Ghosh told Reuters by telephone.
He said the company was planning to divest a 10% stake in pre-IPO placement and a further 10% to public, if it gets and approval.
“If we do not get approval due to some unforeseen reason then we’ll go for a strategic partner or a financial partner for 20% or up to 26%,” Ghosh said, adding the strategic partner would most likely be a foreign insurance company.
He said the main aim behind the proposed insurance IPO was to unlock value for parent Reliance Capital.
“Capital requirement for this (insurance) company is coming to a stage where we do not need much capital because we injected the capital required for growth.
Now we only need minimum capital for solvency requirement,” he said.
“Our thinking was that we want to set a benchmark valuation for our company.”
Reliance Capital ranks No. 4 among India’s private life insurers, where public sector giant Life Insurance Corp is still the dominant player.
Reliance Life hopes to break even by the next financial year, Ghosh said. Total premium is expected to quadruple to Rs20,000 crore ($4 billion) by the year to March 2012, from Rs4,930 crore at the year ended March 2009, he said.