HDFC Life files draft paper with Sebi for IPO

Embedded value pegged at Rs 13,220 crore in June

HDFC Standard Life Insurance Company (HDFC Life) has filed a draft red herring prospectus with the Securities Exchange Board of India (Sebi) for an Initial Public Offer of 299.8 million shares. 

Housing Development Finance Corporation (HDFC) plans to offload up to 191.2 million shares (9.57 per cent stake) and Standard Life, its joint venture insurance company, will sell up to 108.6 million shares (5.43 per cent stake) through the public offer, according to the prospectus.

HDFC holds 61.5 per cent in the life insurance company. Standard Life, the UK-based foreign partner, holds 35 per cent.

Merchant bankers for HDFC Life IPO’s include Morgan Stanley, HDFC Bank, Credit Suisse and Nomura.

According to the draft prospectus, the embedded value of HDFC Life was Rs12,470 crore at the end of March 2017, up from Rs10,232 crore at the end of March 2016. As on June 30, its embedded value was pegged at Rs13,220 crore.

It had a net worth of Rs4,150 crore and a solvency ratio of 197.5 per cent on June 30, 2017, above the minimum 150 per cent solvency ratio required under the Insurance Regulatory and Development Authority of India (Irdai) rules.

After Irdai rejected the initial structure of merger between HDFC Life and Max Life, the board of HDFC Life decided to go ahead with their listing plans as no other alternative structure was in place. Moreover, Standard Life had expressed apprehension of a new structure’s viability and stated its intent to go for a listing at the earliest opportunity.

For the financial year ended March 31, 2017, HDFC Life posted a gross premium income of Rs19,445 crore and the profit after tax stood at Rs892 crore and its net worth stood at Rs3,839 crore.