Home / Industry / HDFC Life files application for IPO with IRDA

Mumbai: HDFC Life, a subsidiary of the country’s largest housing finance company HDFC Ltd, has filed an application with the Insurance Regulatory and Development Authority of India (IRDA) seeking approval for its planned initial public offering, two persons with direct knowledge of the development told Mint.

The company is expected to file a draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) in August, the two persons said.

According to the people cited above, HDFC and Standard Life Plc are likely to dilute stake in the ratio of 3:1 through the IPO. Currently, HDFC owns 61.65% stake and Standard Life holds 35% in the life insurance company.

The development comes after HDFC Life earlier this week decided to go ahead with the IPO as the deadline for a merger with Max Life Insurance Co. Ltd was extended after IRDA rejected a previous structure for the same, citing violation of Section 35 of the Insurance Act. The board of directors of HDFC, on 17 July, approved an enabling resolution for an IPO.

Both HDFC as well as Standard Life (Mauritius Holdings 2006) will dilute their shareholding through an offer for sale of equity shares up to 20 % and raise anywhere between Rs8,000 crore and Rs10,000 crore. An HDFC Life spokesperson declined comment.

HDFC Life had hired investment banks for the IPO in May last year and had initially targeted the end of 2016 to hold its share sale but later put plans on hold as discussions with Max Life began for the merger which would have led to an automatic listing.

“We have kept the option for the proposed merger with Max Life open," Amitabh Chaudhry, managing director and CEO, HDFC Life, told Mint earlier this week.

“We still feel there is a lot of synergy in the merger and will benefit both the companies. The IPO should happen before December," Chaudhry added.

Mint had reported in June that HDFC Life had informally reached out to a few domestic and foreign investment banks for its IPO after IRDA earlier that month rejected the original three-step merger plan, citing legal violations.

Indian companies have raised a total of $10 billion in the first half of 2017 by selling equity and equity-linked securities, a 127.8% increase from a year ago, according to a report by Thomson Reuters. Financial services sector accounted for majority of activity with 52.8% market share and generated $5.3 billion in proceeds.

On 18 July, Mint reported that SBI Life Insurance Co. Ltd, the joint venture between SBI and BNP Paribas, filed the draft red herring prospectus for its IPO to raise more than $1 billion.

On 14 July, ICICI Lombard General Insurance Co. Ltd, the non-life insurance joint venture between ICICI Bank Ltd and Fairfax Financial Holdings Ltd, filed its draft red herring prospectus. The two shareholders plan to sell a combined 19% stake through the IPO.

Many other insurance companies, including state-owned ones, are queuing up to launch IPOs.

In April, Mint had reported that New India Assurance Co. Ltd and General Insurance Corp. of India Ltd (GIC) had hired investment banks to manage their IPOs as the government seeks to pare its stake in the state-run insurers.

Reliance General Insurance Ltd, the non-life insurance arm of Reliance Capital, is also planning to list, the company said last month.

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