IRDA plans mandatory listing for 10-year-old life insurers: IPO deluge likely

MUMBAI: If the insurance regulator has its way, it may well be a deluge of initial public offering from insurance companies in the next three years. The regulator plans to mandate all companies with about 10-year history to list on stock exchanges which would help them raise capital as well as make their operations transparent which at present remains opaque without public scrutiny, a member on the board of Insurance Regulatory and Development Authority of India (Irda) said.

The regulator's tough prescription may also lead to some companies amalgamating to remain successful or even get a better valuation than what the market would have given otherwise. “We are prescribing that it is essential from corporate governance point of view to list," Nilesh Sathe, member, supervising life insurance business on the board of IRDAI told ET in an interview. “If you are not able to list due to any restrictions, then what choice do they have? They will have to merge with smaller or bigger company. We will take the discussion paper on compulsory listing forward. They should be given a time-frame. It will not end at discussion paper but taken to a logical conclusion.“

Irda's assertion on making companies go public may be putting many in a tight spot as some struggle to remain afloat leave alone making profits. In fact, HDFC Life which was about to float an IPO opted to go for a reverse merger with Max Life and get a listing. ICICI Prudential Life which has filed an offer document with the markets regulator is likely to be create a record by becoming the first insurer to list.

The sector that was opened to private companies in 2000, has 54 insurance companies.

Around 32 of these life and general insurance companies have been in operations for a minimum of eight years.