Wishing to hit the market with an initial public offer for its life insurance business, an Anil Ambani group firm has approached the government to waive off the ten year clause for an insurer to go public.
Reliance Life has requested the Finance Ministry to allow it to launch IPO before completion of the 10-year operation clause, official sources said.
The 6AA provision of the Insurance Act, specifies that Indian promoters having more than 26 per cent shareholding shall after 10 years reduce it in some appropriate manner or within such period the central government may decide.
Citing the above provision, the insurance sector regulator IRDA has already shot down the proposal of the Reliance Life to hit the capital market.
"They (Reliance Life) had come to the regulator to seek the permission and we have found that we are not empowered to accord any such thing before 10 years," IRDA Chairman J Hari Narayan had said.
When contacted Reliance Capital spokesperson declined to comment on the matter. Reliance Capital, the holding company of Reliance Life, last week said that it plans to come up with an initial public offer for its life insurance business or go in for a strategic stake sale.
At Reliance Capital's Annual General Meeting recently, ADA Group Chairman Anil Ambani said he was considering various options to unlock value of the life insurance business-- "from a potential IPO to strategic or financial stake sale, or even a combination of both-- subject to necessary approvals."
"A final decision in this matter will be taken shortly, driven by the sole objective of maximising returns for our shareholders," he had said.
Since the past four years the company's life insurance business has grown rapidly, and has emerged amongst the top four private life insurance players in India.
Reliance Life Insurance registered 65 per cent growth of policy-holders' funds under management to Rs 5,895 crore in 2008-09 from Rs 3,555 crore in FY'08. During FY'09, eight new life insurance policies were launched by the company.
