Record year for IPOs seen as insurers target rally

MUMBAI: Indian initial public offerings (IPOs) are headed for a record year, as a rush of insurers seek to ride a rally in the local market and tap increasing investor demand for financial assets.

At least four Indian insurers were aiming to price stock offerings by the end of this year, said sources.

Total fundraising from firsttime share sales in India could rise to 500 billion rupees (RM33.46 billion) this year, said Ajay Saraf, head of investment banking at India’s No. 1 IPO underwriter ICICI Securities Ltd.

That would represent about an 85 per cent increase from last year and surpass the record tally of 363 billion rupees set in 2010, data compiled by Bloomberg show.

HDFC Standard Life Insurance Co was planning to seek as much as 100 billion rupees in an IPO, while a potential offering from SBI Life Insurance Co could total about 85 billion rupees, said the people.

Firms are seeking to take advantage of a surging Indian equity market where there is a dearth of insurance stocks for investors looking to diversify their holdings in the financial industry.

The offerings follow the Indian Parliament’s 2015 vote to increase the amount foreign investors can own in the nation’s insurers to 49 per cent from 26 per cent.

“Everyone is in a rush to tap the market before the froth starts settling,” said Rethish Varma, a Bengaluru-based researcher at MarketSmith India.

Only one pure-play insurer IPO has ever priced in Mumbai, a 60.6 billion-rupee deal from ICICI Prudential Life Insurance Co.

Shares of the company have risen 28 per cent since they began trading in September last year. Bloomberg