Standard Life sells 4.96% in HDFC Life, raises ~5.7K cr

Standard Life (Mauritius Holdings) on Wednesday sold 4.96 per cent stake in Housing Development and Finance Corporation (HDFC) Life Insurance Company to a clutch of institutional investors through multiple block deals. The sale took place at ~575.15 apiece, helping the Uk-based Standard Life mop ~5,752 crore.

Among the buyers were a host of foreign institutional investors (FIIS) such as Euro Pacific Growth Fund, Capital Group, New World Fund, and American Fund Insurance Series.

In the secondary market, shares of HDFC Life closed at ~632, up 3.6 per cent on the BSE. Market players said good demand for the share sale bolstered the stock price. The weightage of HDFC Life in global indices, including the MSCI Emerging Market index was set to rise, thanks to the increase in free float following the share sale.

Standard Life is co-promoter in the life insurance major along with HDFC.

As of September, Standard Life held 19.69 per cent equity stake in HDFC Life. Post the bulk deal, its stake will drop to 14.73 per cent.

So far this year, Standard Life has pared its stake in HDFC Life through a number of tranches. In August, Standard Life had sold 3.2 per cent in HDFC Life via block deals. Prior to that, Standard Life had sold 1.78 per cent stake for approximately ~1,400 crore. In March, it had divested 4.93 per cent stake to raise ~3,600 crore.

With Standard Life paring its stake, the promoter shareholding in the company has been coming down. As of March 2019, the promoter shareholding was above 76 per cent which subsequently came down to 74.49 per cent in June 2019 and 71.16 per cent in September 2019. Post the bulk deal, the promoter shareholding will be down to 66.2 per cent.

Bank of America Merrill Lynch was managing the share sale for Standard Life.

From October lows of ~575, shares of HDFC Life had gained as much as 8 per cent amid strong buying in shares of private insurers.

HDFC Life posted 7.5 per cent rise in standalone net profit to ~308.69 crore for the second quarter ended September 30. The company's net profit in the year-ago period stood at ~286.98 crore.

Total income of the insurance firm rose to ~8,661.56 crore from ~7,902.10 in the same quarter a year ago, HDFC Life said in a regulatory filing. The asset under the management of insurance firm rose to ~1.3 trillion.