Irda eases norms for investment in IPOs

The Insurance Regulatory & Development Authority (Irda) today eased initial public offer (IPO) investment norms for insurance companies and allowed them to treat investments in offers of over Rs 500 crore as "approved investments".

The revised investment guidelines stipulate that the issue size needs to be a minimum of 5 million equity shares. "The company issuing shares through IPO shall belong to a financially sound group with a good performance record, for which the insurer's board shall lay down the criteria," the revised norms said.

The Irda circular to insurance companies has also advised life insurers to ensure that they should invest only in companies that have paid at least 4 per cent dividend for at least seven years preceding years, or alternatively, for at least seven of the preceding eight or nine years. For general insurance companies, the dividend criterion has been fixed at three years.

For companies, formed out of a de-merger, the performance record would apply to the parent company, it added.

Insurance companies have been asked to empower their respective investment committees to approve investment in IPOs. Any investment that does not meet the conditions are to be classified as 'Other than Approved Investments'.