Standard Life, the UK-based investment manager, will raise about Rs 1,404 crore ($202 million) by selling a 1.78% stake in HDFC Life Insurance Company Ltd.
The British company will sell up to 36 million shares at a floor price of Rs 390 apiece, HDFC Life said in a stock-exchange filing. Shares of HDFC Life rose 3.2% on the BSE on Thursday to close at Rs 417 apiece.
The share sale will open for non-retail investors on Friday and for retail investors on Monday. Non-retail investors can also bid on Monday. DSP Merrill Lynch Ltd is managing the sale.
Standard Life said it was reducing its stake to help the Indian insurer meet the minimum public shareholding norms of the Securities and Exchange Board of India for listed companies. Promoter holding in HDFC Life will drop from 76.14% to 74.36% after the sale, below the 75% cap.
Standard Life held a 24.66% stake in HDFC Life at the end of March this year, stock-exchange data showed. According to the listing agreement, it is required to hold a stake of at least 9% in HDFC Life till March 2021 to meet lock-in requirements.
The planned sale comes nearly two months after Standard Life sold a 4.9% stake in HDFC Life for about Rs 3,557 crore. That development came after VCCircle first reported in February that the UK-based firm was looking to offload part of its stake in the insurer.
HDFC Life was set up in 2000 as a joint venture between HDFC Ltd and Standard Life Aberdeen plc through The Standard Life Assurance Company, a wholly owned subsidiary. The company went public after a failed bid for a merger with the Analjit Singh-promoted Max Financial Services.
In 2010, SEBI had asked all publicly traded companies to raise their public shareholding to a minimum of 25%. That mandate was extended to state-run companies in 2014. In December 2017, the regulator allowed company promoters to use qualified institutional placement and condition-based share sales on the open market to reduce their shareholding.