HDFC Life seeks $9 bn valuation via IPO

By Ankit Doshi

  • 26 Oct 2017
Credit: Shah Junaid/VCCircle

India’s third-largest private sector life insurer HDFC Standard Life Insurance Co is seeking a Rs 58,260.22 crore ($8.96 billion) valuation through an initial public offering that begins on 7 November.

HDFC Standard Life on Thursday fixed a price band of Rs 275-290 apiece for an IPO size of Rs 8,695 crore ($1.34 billion), mortgage lender and the company’s parent HDFC Ltd said in a stock exchange filing.

The public offering will close on 9 November. The insurer joins a growing number of Indian insurance firms – life and non-life – that have either firmed up plans for a public offering or already gone public. These include General Insurance Corporation (GIC Re), SBI Life Insurance Co, ICICI Lombard General Insurance, New India Assurance and Reliance General Insurance Co.

ICICI Prudential Life Insurance became the first life insurer in India to go public last year.

HDFC Life, which counts Azim Premji’s private investment arm PremjiInvest as an investor, will sell 299.82 million shares. The proposed issue comprises an offer for sale by its joint venture partners – mortgage lender HDFC Ltd and UK-based Standard Life Plc. The two partners will be selling a total of 14.97% stake in the IPO.

The company had filed its draft red herring prospectus (DRHP) with SEBI on 19 August. It received regulatory nod on 13 October.

The move to go for a public listing comes after its plans for a merger with billionaire Analjit Singh-promoted Max Financial Services Ltd hit a regulatory hurdle.

HDFC owns 61.65% and Standard Life 35% of the insurer while minority shareholders hold the remaining.

A public listing was HDFC Life’s initial plan. Subsequently, HDFC and Max Financial began exploring a merger of their insurance businesses, which would have resulted in India’s largest private sector life insurer with an annual premium worth Rs 25,500 core, surpassing ICICI Prudential Life Insurance Co. Ltd.

They, however, failed to get the approval of the Insurance Regulatory and Development Authority of India (IRDA) for the amalgamation.

After IRDA raised objections, both the companies said they would file a revised merger structure with the insurance regulator.

As VCCircle reported in May, simultaneous life insurance IPOs were forcing merchant banks to be choosy as they cannot represent two insurers at the same time.

To manage the IPO, HDFC Life has picked as many as 10 bankers, including the eight that were named by VCCircle in July.

Morgan Stanley, HDFC Bank, Credit Suisse, CITIC CLSA and Nomura are the global coordinators and book running lead managers. Edelweiss, Haitong, IDFC, IIFL and UBS are the other merchant bankers involved in the issue.

HDFC Standard Life, which operates under the banner of HDFC Life, was the first private life insurer to be created way back in 2000. Standard Life hiked its stake in the firm two years ago soon after the foreign investment limit in the insurance sector was raised.

In December 2014, PremjiInvest had picked up close to 1% stake in the firm for Rs 200 crore, valuing the firm at Rs 21,000 crore. Standard Life had hiked its holding almost one year later, valuing the firm at around Rs 19,000 crore.