New Delhi: The Insurance Regulatory and Development Authority (IRDA) on Frdiay said it would come with initial public offer guidelines for the insurance sector within a fortnight to allow companies to raise funds from the capital market.
“IPO guidelines would be issued in the next 15 days,” Insurance Regulatory and Development Authority (IRDA) member R Kannan told PTI.
IRDA, which has been working on the guidelines along with market regulator Securities and Exchange Board of India (Sebi), is likely to come out with a draft for public comments before issuing the final guidelines.
Several private sector insurance companies, including Reliance Life, have shown interest in tapping the capital market to augment its resource base.
The Government had proposed to ease the norms to allow companies to list after five years of operation, instead of the current 10-year norm.
However, Kannan said, “no decision has been taken on reducing the number of years before permitting insurance companies to go public.”
As per the Insurance Act, the promoters having 26% stake can offload equity after 10 years of operation of the company. The legislation also empowers the govenment to reduce the mandatory period.
The IRDA had already notified the disclosure norms, necessary for providing details about the operations and balance sheets on quarterly and yearly basis.
The IPO guidelines will deal with minimum norms that a company must fulfill before hitting the capital market.
The three essential steps for hitting capital market are — norms for correct valuation; disclosure of operating results and profit and loss account; and filing of Draft Red Herring Prospectus (DRHP).
Besides the state-owned Life Insurance Corporation, 22 private companies are offering life insurance policies. The general insurance sector has 21 players which include four state-owned companies.
Anil Ambani Group’s life insurance venture Reliance Life expects to tap the capital market with its initial public offer in the first quarter of next fiscal.
Reliance Capital, the holding company of Reliance Life Insurance, is currently waiting for the final regulatory guidelines on the issue from insurance regulator IRDA and the subsequent clearance from the finance ministry, Reliance Capital CEO Sam Ghosh had said.
Reliance Life could be the first life insurance company in the country to come out with an IPO once the guidelines are framed.