IRDA paves way for HDFC Life to buy HDFC's shares

MUMBAI: In what would help in HDFC Life's reverse listing and pave way for Standard Life to buy shares of HDFC limited, the insurance regulator has exempted listed insurance companies, where parents are governed by RBI, Sebi and NHB from maintaining indirect foreign shareholding.

In a notification as under eighth amendment to the Insurance Act, the regulator said that listed insurance companies promoted by entities that are regulated by Reserve Bank of India, capital market regulator Sebi and housing finance regulator National Housing Bank would be exempted from maintaining indirect foreign shareholding.

Under the new norm, Standard Life will be allowed to hold stake in HDFC Limited and HDFC Life and it's investment in HDFC Limited will not be treated as indirect investment into HDFC Life, once the company lists.

In June this year, HDFC Life has entered into an agreement to merge with Max Life and then if will merge with Max Financial Services, which is a listed company.
Since Max Financial Services is a listed entity, this will lead to listing of HDFC Life’s shares on Indian exchanges. HDFC Life was preparing to go for an IPO by year-end. It had announced its plans on April 19.

In the merged entity, HDFC group will own about 65% stake while Max Group will own the remaining about 35% stake.

Earlier the regulator had exempted insurance companies promoted by banks from maintaining indirect shareholding.

ICICI Prudential Life is in the process to list its shares and has filed draft red herring prospectus with Sebi.