MUMBAI: The insurance IPO party, which is just getting started, is likely to mop up anywhere between Rs 30,000 and Rs 35,000 crore this fiscal. The proposed amount is bigger than Rs 26,000 crore that 26 companies collected in 2016, which is also the best in six years.
Following the Irdai’s relaxation for capital raising norms last August (allowing insurers over 10 years to go public), at least five insurers have decided to go public and will likely get listed this fiscal. These include ICICI Lombard General Insurance, HDFC Life Insurance, SBI Life Insurance, New India Insurance and reinsurer General Insurance Corporation of India (GIC).
There are over 54 life and non-life insurers in the country, but only one of them — ICICI Prudential Life Insurance — is listed currently. In February, the government announced its intent to listing five state-run insurers namely New India, Oriental Insurance, National Insurance, United India Insurance and GIC and expects to earn at least Rs 10,500 crore or ($1.63 billion) from each of the insurers.
“Insurers are hoping to cash in on the buoyancy in the Indian equity market and 2017 could well prove to be a turning point for insurers. The pricing that we have announced is based on market feedback. What we believe is that, people should look at it as an opportunity,” said Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance, whose IPO will begin on Friday.
Going public increases accountability and transparency provides a new investment avenue for retail investors in insurance and helps capital mobilization for insurers. “It generates liquidity and allows businesses to grow aggressively,” Manoj Kumar Jain, MD, Shriram Life Insurance told Express.
Insurance penetration currently stands at a mere 3.86 per cent of GDP. Insurers publish financials in formats different than banks and NBFCs and those companies that are gearing up to hit the capital markets will be disclosing two sets of financials - both as per IRDAI and Sebi norms.
According to Jain, the listing will improve the quality of disclosures and makes companies answerable to investors.
