Float hope for all insurers
>> Sunday, October 31, 2010
Offerings even without the necessary profit track record provided they engage institutional investors in buying at least half of the shares being sold.
Sebi last week cleared the disclosure and accounting requirements for public offers by life insurance companies.
It, however, declined to relax the norms on mandatory profitability track record, as requested by the Insurance Regulatory and Development Authority (Irda). Sebi has informed Irda that life insurance companies can launch public offers, subject to certain conditions, even if they do not meet the requirement of reporting profits in at least three years of the immediately preceding five years. The condition will require the insurers to launch their IPOs compulsorily through the book-building process, sell to the institutional investors at least 50 per cent of the shares and take steps to ensure sufficient liquidity in stock after the offer, a senior Sebi official said.
Sebi looked into Irda’s request to relax the eligibility requirement related to profitability criteria in its board meeting last week, the official said. Irda had represented that insurance companies might find it difficult to comply with the norm as the gestation period of their business was comparatively longer. It takes around 6-7 years for a life insurer to break even.
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