PremjiInvest-backed HDFC Life files documents for IPO

PremjiInvest-backed HDFC Life files documents for IPO


  • 19 Aug 2017
PremjiInvest-backed HDFC Life files documents for IPO
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HDFC Standard Life Insurance Co. Ltd has filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering. The move comes after its plans for a merger with billionaire Analjit Singh-promoted Max Financial Services Ltd hit a regulatory hurdle.

It becomes the third life insurer to opt for a public listing. ICICI Prudential Life Insurance had gone public last year, while SBI Life is awaiting the capital market regulator’s nod to float its issue.

The proposed issue comprises an offer for sale by its joint venture partners – mortgage lender HDFC Ltd and UK-based Standard Life Plc. The two partners will be selling a 14.97% stake in the IPO.


Earlier, people familiar with the process had told VCCircle that the size of the proposed IPO was estimated at Rs 7,000 crore ($1.1 billion). This will be similar to the planned IPO of rival SBI Life Insurance Co.

The HDFC Life IPO is being targeted for the end of 2017, or early 2018, one of the persons cited above had said.

Here’s a snapshot of HDFC Standard Life’s proposed 46549IPO:



HDFC will sell a 9.55% stake, while Standard Life will divest a 5.42% stake in the issue. The company shall not get any proceeds from the IPO, but could value HDFC Standard Life at Rs 46,500-47,000 crore ($7.2 billion).

This would make it the third most valued life insurer on the bourses, behind ICICI Prudential and the anticipated market cap of SBI Life.



The firm has picked as many as 10 bankers to manage the issue, including eight that were named by VCCircle last month.

Morgan Stanley, HDFC Bank, Credit Suisse, CITIC CLSA and Nomura are the global coordinators and book running lead managers. Edelweiss, Haitong, IDFC, IIFL and UBS are the other merchant bankers involved in the issue.



HDFC and HDFC Standard Life have appointed law firm AZB & Partners, while Standard Life has appointed Cyril Amarchand Mangaldas as Indian legal counsel.

The managers to the issue have named S&R Associates and Latham & Watkins, as legal advisors, according to Indian and international law, respectively.



HDFC Standard Life, which operates under the banner of HDFC Life, was the first private life insurer to be created way back in 2000. Standard Life hiked its stake in the firm two years ago soon after the foreign investment limit in the insurance sector was raised.

In December 2014, PremjiInvest, the private investment arm of Azim Premji, had picked up close to 1% stake in the firm for Rs 200 crore, valuing the firm at Rs 21,000 crore. Standard Life had hiked its holding almost one year later, valuing the firm at around Rs 19,000 crore.

HDFC currently owns a 61.41% stake in the life insurance company, while Standard Life holds 34.86%. The remaining stake is held by PremjiInvest and other individuals, including HDFC top management and realtor Narendra Hiranandani.

The firm claims to be the most profitable life insurer, based on the value of new business (VNB) margin, and was among the top five private life insurers in India (measured on total new business premium) for 2015-16 and 2016-17, according to rating and research firm CRISIL. It is also been among the top three private life insurers in terms of market share, based on the total new business premium between 2014-15 and 2016-17.

While SBI has remained the top private life insurer in terms of new business premium through the years, HDFC Life has been closely competing with ICICI Prudential. Last year HDFC Life had regained the number two spot after losing it to ICICI Prudential in 2015-16.

Unlike its key private insurance rivals SBI Life and ICICI Prudential, HDFC Life generates over half of the new business premium from direct business.


HDFC Life’s net profit rose 8.5% to Rs 887 crore for the year ended March 2017. Premium income rose 19% to Rs 19,274.8 crore during the same period.

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