HDFC Life Insurance Co. Ltd. (HDFC Life) on Friday filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) ahead of launching its initial public offering (IPO) to sell a 14.97% stake.
The DRHP follows a board resolution by the insurer last month. On 17 July, the HDFC Life board passed a resolution, clearing the IPO by way of offering a combined 20% holding, of which the insurer’s UK-based JV partner, Standard Life (Mauritius Holdings) 2006 Ltd, is to offload more than 10%.
As per the prospectus filed with Sebi, HDFC will dilute about 9.55% stake and Standard Life will offload about 5.42% in the IPO.
HDFC Life’s embedded value had risen to Rs12,390 crore, as on 31 March, 2017. This means the actual value of the insurer, as per prevailing valuation standards, could be at least Rs37,000 crore. At this valuation, the value of the 14.97% stake on offer via IPO could be pegged at about Rs5,500 crore.
Last month, HDFC Life had decided to go for the IPO, dropping its original plan to complete its merger with Max Life Insurance Co. Ltd, which could have led to an automatic listing for the merged entity.
The two companies called-off the merger due to a regulatory hurdle.
HDFC Life is a joint venture between HDFC Ltd (61.52%) and UK’s Standard Life (35%).
HDFC had said in an exchange filing last month that the size of the offer, price and other details would be determined in due course.
For 2016-17, HDFC Life recorded a gross premium income of Rs19,445 crore, while its profit after tax for the year stood at Rs892 crore. Total income was Rs22,189 crore and the net worth stood at Rs3,839 crore as on 31 March.
At present, apart from HDFC Life, state-run SBI-promoted life insurer—SBI Life Insurance Co. Ltd—is working on its IPO plans.
Last month, the insurance regulator approved SBI Life’s application for an IPO, which seeks to raise Rs7,000 crore, the largest such share sale by a life insurer in India.
According to a 7 July Mint report, SBI Life could sell shares amounting to a 12% stake, raising Rs6,000-7,000 crore.
Last year, ICICI Prudential Life Insurance Co. Ltd sold shares worth Rs6,057 crore through an IPO and became the first insurance firm to get listed.
At the time of listing, ICICI Prudential was valued at Rs48,000 crore.
At the end of March, the company’s EV stood at Rs16,184 crore.
Source: Mint