In less than three weeks, three insurance firms, including HDFC Standard Life, have filed draft papers for IPOs that together are estimated to be worth nearly Rs20,000 crore.
With the IPO market bustling with activity, two government-owned entities—New India Assurance and General Insurance Corporation of India (GIC)—have joined the bandwagon this month. The public sector insurers are expected to hit the market in the current financial year to help the government meet its ambitious disinvestment target of Rs72,500 crore.
Amid persisting bullish market sentiments, despite intermittent volatility, around two dozen companies have filed preliminary papers for initial public offers (IPOs) with regulator Securities and Exchange Board of India (Sebi) so far this year.
Going by current trends, the IPO segment is expected to see better performance in 2017 compared to last year, when 26 companies collectively mopped up more than Rs26,000 crore—making 2016 the best in six years.
HDFC Standard Life Insurance is the latest company to join the IPO league and submitted draft IPO papers on 18 August. The share sale is expected to be worth around Rs7,500 crore, as per market people.
HDFC Standard Life Insurance’s IPO comprises an offer for sale of over 29.98 crore equity shares or 14.97% stake. This includes sale of 9.55% stake by HDFC Ltd and 5.42% holding by Standard Life Mauritius.
Through New India Assurance’s IPO, the government plans to sell 9.6 crore shares, besides fresh issue of 2.4 crore shares. It filed draft prospectus with Sebi on 8 August. The offer is expected to fetch more than Rs6,500 crore, people aware of it said.
In the case of GIC Re, the offer includes sale of 10.7 crore shares by the government apart from fresh issue of 1.7 crore shares. It filed IPO papers with Sebi on 7 August.
According to people aware of the matter, GIC Re’s IPO is also expected to mop up an amount similar to that of New India Assurance. Put together, the IPOs of the two insurance firms and one reinsurance company are estimated to fetch nearly Rs20,000 crore.
Last month, SBI Life Insurance Company and ICICI Lombard General Insurance Company had approached the Sebi with their respective IPO papers.
In 2016, ICICI Prudential Life Insurance became the country’s first listed insurer after its Rs6,000 crore public issue. By taking the IPO route, the companies expect to achieve benefits of listing as well as enhance their brand name and provide liquidity to the existing shareholders.
According to market experts, proactive regulatory environment coupled with general uplift in investors’ sentiment has given a fillip to the domestic IPO market.
Market watchdog Sebi has taken numerous steps that are encouraging companies to sell shares. One key enabler was making Asba (Application Supported by Blocked Amount) mandatory for all investors, including retail.
Market analysts feel that attractively priced IPOs would receive solid response from investors as chances of getting listed with higher premiums are more.