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Tuesday, April 12, 2011

IPO norms by end of April 2011

The IRDA Chairman has announced that the IPO norms for insurance companies in India would be announced by the end of April 2011. Speaking at a conference in Delhi, the Chairman mentioned that a couple of private insurance companies would be completing 10 years of operation (HDFC Life and ICICI Prudential Life) by the end of April 2011, and the initial condition has been that private companies need to be in existence for 10 years before going public, thus norms need to be ready by then. 

It would be interesting to note which life insurance companies decide to tap the equity markets. While the markets have been on a roll, the regulations effective Sep 1 2010 for Unit Linked products (ULIPs) might depress valuations of the life insurance companies. While Bajaj, Max ,ICICI etc have their holding companies listed and the market has assigned an indirect value to the insurance companies, it would be nice to see how the market values a directly listed life or general insurance company. Insurance penetration which is at 5% of GDP and has a total market size of Rs 3 lakh crores still has a lot of potential to expand further in India, and that should keep the capital markets interested.

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