SBI General Insurance IPO is the latest one to be postponed
Initial public offerings (IPOs) in the insurance sector are gradually being deferred as companies await better market conditions, and in some cases, the exit of joint venture partners.
SBI General Insurance, PNB MetLife Insurance and the combined entity of three PSU insurers (National Insurance, United India and Oriental Insurance) were expected to come out with their IPOs this year.
However, these entities are now waiting for a 'right time' for the IPO.
The proposed IPO of SBI General Insurance has been postponed to the next year. In its post-earnings call on August 2, State Bank of India (SBI) Chairman Rajnish Kumar said the bank would like to wait one more year for the IPO.
This means SBI General Insurance IPO could now be launched in FY21 instead of the original plan to list it on the stock exchanges in FY20. An earlier deal had valued SBI General at Rs 12,043.25 crore.
SBI General is a joint venture between IAG and State Bank of India. SBI holds 70 percent in the venture while IAG holds 26 percent.
"We are waiting for a movement on the IAG exit. In those circumstances, it is advisable to wait for one more year. Let this transition happen. IAG is evaluating currently, it is yet to come to finality," said Kumar.
IAG had earlier in 2019 expressed interest to exit the general insurance venture and a slew of private equity firms were eager to buy out its stake.
PNB MetLife Insurance is also awaiting an improvement in the stock market condition to announce its IPO. It had received the markets regulator's nod for the IPO in November 2018.
The company was waiting for the general elections to be over before approaching the markets. But given the volatility, it didn't want to take a risk.
PNB MetLife did not immediately respond to a Moneycontrol query.
In terms of size, the proposed general insurance IPO of the three merged PSU general insurers would have been the largest one in the sector. However, there has been an inordinate delay in the process with the government also looking at a merger of these entities with New India Assurance.
Due to solvency (minimal capital) concerns, the government had delayed the merger process. Further, the insurers are now waiting for a capital infusion from the government after which the merger/IPO process will restart.When the insurance industry was opened up to the private sector in 2000, it was an informal understanding that companies will get listed after being in operation for 10 years. However, the first insurer (ICICI Prudential Life Insurance) got listed in 2016. A total of six insurance companies (including reinsurer GIC Re) are listed on the stock exchanges.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.