HDFC Life may delay IPO to next year

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HDFC Standard Life is planning to push its initial public offering to next year as current valuations are not attractive. This comes even as the insurance regulator is expected to announce IPO guidelines by the month-end.

With growth in the sector slowing down in the second half of 2010-11 after the Insurance Regulatory and Development Authority (IRDA) announced stricter guidelines for Unit-Linked Insurance Plans in September last year, valuations of life insurers have taken a hit.

Stake dilution

"Though we had indicated that we would hit the markets by the second quarter of this fiscal, it is unlikely that the IPO will happen in 2011. It will more likely be in the first half of 2012. Valuations are not right at the moment, as margins are down," a senior official in the private sector insurance company told Business Line.

Industry sources added that the company, which completed a decade last year, has been planning to dilute around 10% stake. However, HDFC Life will wait till the enterprise valuation for the company touches Rs 18,000-20,000 crore.

Mr J Hari Narayan, Chairman, IRDA said earlier this week that that the guidelines for life insurers which have completed 10 years of operations and are looking to hit the capital markets are expected by April-end. Among other companies, Reliance Life is also planning to list.

The company official said that a faster clearance of the Insurance Bill will also be a boon for life insurers, where the foreign partner is looking to bring in further capital. It will reduce the capital strain on the domestic partner.

"The Insurance Bill is expected to be tabled in the Monsoon session of Parliament. We hope it gets cleared soon. Both the IPO guidelines and the new Bill should compliment each other by making it easier to raise capital," said the official.