Sep 14, 2017 08:31 PM IST | Source:

SEBI raises several observations on HDFC Standard Life IPO: Sources

SEBI has sought clarification on a number of issues including the risk factors, ESOP policy and conflict of interest between HDFC Bank and HDFC Standard Life

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The Securities and Exchange Board of India (SEBI) has raised observations regarding the HDFC Standard Life Insurance’s IPO based on the Draft Red Herring Prospectus filed, a source told Moneycontrol.

SEBI has sought clarification on a number of issues including the risk factors and conflict of interest between HDFC and HDFC Standard Life, among others.

The market regulator has asked HDFC Standard Life to explain the reason behind the sudden spike in its consolidated profit for FY14 as well as the spike in advances and assets in FY17.

HDFC Life did not respond to a mail sent by Moneycontrol.

In August, private life insurer HDFC Standard Life Insurance filed the draft red herring prospectus (DRHP) for an IPO with SEBI. This comprised 299,827,818 equity shares of face value of Rs 10 each. This included 191,246,050 equity shares by HDFC and 108,581,768 equity shares by Standard Life. The offer comprised a net offer to the public of up to 266,895,517 equity shares.

Since there is a shareholder agreement already between HDFC and Standard life which is expected to be terminated after the listing, SEBI is keen to know what the new listed entity will be named.

Sources further tell Moneycontrol that the regulator is clearly not happy with the math that has gone into calculating the issue price.

Again, the regulator, say sources, has taken exception to the fact that HDFC Bank is one of the merchant bankers of the issue which could give rise to a conflict of interest as it is a group company.  Another grouse, according to the source, with the SEBI is that HDFC Standard Life has not been transparent about the percentage of business accruing from different channels in the DRHP.

The insurance company has been given 21 days by SEBI to respond to the observations.

In July this year, HDFC had informed the stock exchanges that they are planning to sell 9.57 percent stake in its subsidiary HDFC Life Insurance via an initial public offering (IPO). While the plan was to get HDFC Life listed , it did not happen as the Max Life merger with HDFC Life was called off.
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