Times of India
12 July 2010
New Delhi, India

The sectoral regulator IRDA on Sunday said it has finalised IPO guidelines for insurance companies and has referred the same to capital markets watchdog Sebi for final approval which is expected soon. “We are expecting the guidelines shortly. We have given our observations. The matter is currently with Sebi,” Insurance Regulatory and Development Authority (IRDA) chairman J Harinarayan said.

He further said, the valuation norms for companies have been finalised in consultation with the Institute of Actuaries. “IRDA, in consultation with the Institute of Actuaries, has given its views on the IPO. Sebi has to clear it now,” he added.

IRDA, which has been working on the IPO guidelines along with the market regulator Sebi, is likely to come out with a draft for public comments before issuing final norms. Several private sector insurers, including Reliance Life, have shown interest in tapping the capital market to augment their resource base.

The government had proposed to ease the norms to allow insurers to list after five years of operation, instead of the current 10–year practice. As per the Insurance Act, promoters having 26% stake can offload equity after 10 years of operation. The legislation also empowers government to reduce the mandatory period.

IRDA had already notified the disclosure norms necessary for providing details about the operations and balancesheets on quarterly and yearly basis. The IPO guidelines will deal with minimum norms that a company must fulfil before hitting capital markets.

Norms for correct valuation, disclosure of operating results and P&L account and filing of the draft red herring prospectus are the essentials that a company has to fulfil when going for IPO.’