Insurance M&A norms to be out in 2-3 months: IRDA
Insurance Regulatory and Development Authority (IRDA)will come out with guidelines for mergers and acquisition for the industry over the next two-three months while the IPO norms will be out in the next 15-20 days, a senior official said today.
February 21, 2011 / 19:48 IST
Insurance Regulatory and Development Authority (IRDA) will come out with guidelines for mergers and acquisition for the industry over the next two-three months while the IPO norms will be out in the next 15-20 days, a senior official said today.
"We have been examining the pros and cons of the mergers and acquisition in the industry and we are sure to come out with the final guidelines within the next two to three months," IRDA Member-actuaries, R Kannan, told newsmen here on the sidelines of an international conference on actuaries.When asked about the IPO norms for insurance companies, Kannan said, "they (the initial public offering guidelines) will be out within the next 15-20 days."Early this fiscal, the Anil Ambani group company Reliance General insurance had expressed its readiness to take over the Chennai-based Royal Sundaram Alliance Insurance by buying out the entire 74% stake of the domestic promoter Royal Sundaram.But when the group approached for regulatory nod, it was held back as there were no proper regulatory systems in place on the M&A norms in the insurance space.Royal Sundaram Alliance Insurance is a joint venture between the Sundaram Group and the England-based RSA, which owns 26% stake in the company.When asked about the number of companies that have approached the regulator for takeovers, he said, so far only one company has formally approached it."We would know of any such interest only after that company''s application is dispensed with," he said.As and when it happens, the Reliance-Royal Sundaram deal will the first in the non-life space, while in the life insurance space such a deal took place in the past when Reliance Life acquired AMP Sanmar in 2005.Both Reliance Life and Reliance General are part of Reliance Capital, the Anil Dhirubhai Ambani Group''s financial services arm.Recently, the capital market regulator SEBI had accepted the revised IPO guidelines that the IRDA had submitted to it which would be notified soon.
Since the privatisation of the insurance sector, as many as 23 private players have set up shops in the country with foreign participation, which is capped at 26%.While allowing FDI into the sector, it was stipulated that foreign partners cannot quit the JV before 10 years. Many private insurers will be completing one decade of operations by April this year, and therefore are free to go public, which would give their foreign partners an option to call off their joint venture by divesting their stake.Today these 23 private life players are sitting on an asset base of Rs 12-trillion.
While the final IPO norms are awaited, many players like Reliance Life Insurance, ICICI Prudential and HDFC Standard Life have announced plans to tap the capital market.But investment bankers and analysts are of the opinion that unless the Insurance Bill is passed, which seeks to increase the FDI limit to 49% from the present 26%, there won't be any impact on the IPO norms. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
