Irda wants life insurers to face 10% stake sale cap.

Tuesday 22, February, 2011 Life insurance companies will not be allowed to dilute more than 10 per cent stake through initial public offers (IPOs). The Insurance Regulatory & Development Authority (Irda) is set to cap the stake dilution by life insurers in the first three years of listing. The market regulator, the Securities & Exchange Board of India (Sebi), mandates that 25 per cent shares of a listed company should be held by the public. Irda is in talks with Sebi to waive this rule. Private life insurers such as Reliance Life, ICICI Prudential, HDFC Life and SBI Life have expressed interest in tapping the capital markets. The huge valuations of life insurance companies are said to be the main reason for the move, according to a source with direct knowledge of the matter. "At present, the market value of all life insurance companies if they dilute 25 per cent stake is estimated around Rs 60,000 crore. It will be very hard for the market to absorb such a huge amount. So, there must be a cap on the extent of stake dilution," said the source.

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