Mumbai:
Standard Life Mauritius Holdings, the joint venture partner in HDFC Life Insurance, is planning to sell 4.93 per cent stake, or 99.5 million shares, in the life insurance firm at a floor price of Rs 357.50 per equity share.
This is supposed to fetch Standard Life close to Rs 3,557 crore.
A statement from HDFC Life said,"We have noted the disclosure published by Standard Life Aberdeen (SLA) about their intent to sell 4.93 per cent of the total shares outstanding as on date through Offer for Sale (OFS) mechanism. In our opinion, a sell down of 4.93% would help the HDFC Life increase it's public float to 24.2 per cent which is a step closer to IT achieving Minimum Public Shareholding (MPS) prescribed by SEBI. The SEBI Listing Regulations mandates all listed companies to achieve MPS of 25 per cent within 3 years of listing. The above sale is a secondary offer and will not impact the capital position of the company. Currently, HDFC Ltd holds 51.5 per cent and SLA holds 29.2 per cent and balance 19.3 per cent is public float."
The stake sale by Standard Life in HDFC Life comes shortly after the stake sale by BNP Paribas Cardif, the joint venture partner in SBI Life Insurance, another listed private sector life insurance company.
Earlier this month, BNP Paribas Cardif sold 9.2 per cent stake in SBI Life for Rs 4,751 crore. It was one of the largest insurance deals in the country since 2016, when the first insurance company got listed.
Standard Life has proposed to sell up to 70 million equity shares in the company, representing 3.47 per cent stake, to non-retail and retail investors on March 12 and March 13, respectively. Moreover, it has the option to sell 29.5 million equity shares, representing 1.46 per cent stake in the company, as over-subscription option.
At present, Standard Life holds 29.2 per cent stake in the life insurance company while HDFC, the majority stakeholder, has 51.5 per cent stake. After the stake sale, Standard Life’s shareholding in HDFC Life will come down to 24.27 per cent.
Standard Life has appointed DSP Merrill Lynch as the broker for the sale of equity stake in the life insurance company. All the listed private sector life insurance companies stocks have been under some cloud because of company specific concerns. But analysts are of the opinion that with profitability expected to rise, their earnings prospects look better.
Also, because of market volatility, the ULIP sales of the life insurance companies have taken a hit and companies are focusing more on pure protection business, which will boost their margins.