Reliance Capital expects a government waiver for floating its life insurance venture’s initial public offering (IPO) by November 15, Chief Executive Officer Sam Ghosh said.
“Insurance Regulatory and Development Authority (Irda) disclosure norms are likely to come by October 31. Considering that, we expect the government’s response (to the waiver) by November 15,” said Ghosh.
Irda is in the process of drafting listing norms for insurance companies and is currently talking to the Securities and Exchange Board of India about disclosures that are to be made mandatory for these companies when they tap the equity market.
Reliance Life Insurance Co, which was launched four years ago, has applied for the waiver due to the Irda directive that specifies insurance companies that have Indian promoters with more than 26 per cent stake, can float an IPO only after 10 years of operations.
Sam GhoshReliance Capital acquired AMP Sanmar Life Insurance Co in 2005, which started operations in 2002. So, the two companies together have been in business for seven years.
According to Ghosh, the company is likely to file draft red herring prospectus for the IPO in the first week of January, depending on governmental and regulatory approvals.
The company plans to divest up to 20 per cent stake — 10 per cent via pre-IPO placement and a further 10 per cent by public issue. The company would also consider a strategic sale of up to 20 per cent.
“Strategic sale will not be to more than three partners, including a foreign player,” Ghosh said. In July, Reliance Capital had said it plans to sell partial stake in Reliance Life Insurance “later this year”, subject to regulatory approvals.
Reliance Life Insurance aims to manage assets worth Rs RS 40,000 crore by March 2013, versus Rs 10,000 crore as on September 30, which would make it among the top three private insurance companies in the country. Currently, it is placed sixth among private sector insurers. Its assets are likely to be Rs 15,000 crore by the end of 2009-10 (April-March) and the company expects to double it by March 2012.
From 2005 until September, the company clocked a 240 per cent growth in assets.
“Most of the growth happens in the third and fourth quarters,” Ghosh said.
Reliance Life hopes to break even by 2010-2011, Ghosh said, adding total premiums are expected to be Rs 20,000 crore by March 2012 compared with the Rs 10,000 crore target for the current financial year. The insurer plans to grow organically by floating nine products by March and would focus on health insurance products, he said.
Ghosh expects the insurance industry to grow 15-20 per cent this year and by over 25 per cent in 2010-2011.