*Reliance Life getting ready for public offer * **
** ** *Open to divesting up to 26% stake in favour of strategic partner. * Roudra Bhattacharya New Delhi, July 11 Reliance Life Insurance Co Ltd, an Anil Dhirubhai Ambani Group company, has said that it is all geared up to tap the market for fresh capital and will start the IPO process within two weeks after the regulators' approval. It is also on the look out for a foreign strategic partner, to which it is ready to divest up to 26 per cent. In this case, however, the company is prepared to put its IPO plans on hold. Mr Malay Ghosh, President and Executive Director, Reliance Life, told Business Line, “We have aspirations to unlock value in our business through strategic divestment, financial divestment and an IPO. Interest has been shown by a lot of companies and we are in advanced stages in the wait for the guidelines. I think they're [SEBI and IRDA] on the verge of finalising — but we have not been informed yet. We will start the process within two weeks after the approvals.” IPO guidelines Media reports on Sunday quoted Mr J. Harinarayan, Chairman, Insurance Regulatory and Development Authority, as saying that the regulator has finalised the IPO guidelines for insurance companies and has referred it to the Securities and Exchange Board of India, for the final go ahead. It has been proposed to ease the norms by allowing insurers with five years of operations to list, instead of the current practice which stipulates 10 years of operation. Reliance Life is also on the lookout for a foreign partner with experience in the insurance business and is open to divesting up to 26 per cent of the company for this. If a deal with a partner happens for the whole of 26 per cent, then it may postpone its IPO plans. “If a company wants to be a strategic partner for the whole 26 per cent and we see value, then the IPO will have to wait for the regulation change. As long we have 51 per cent stake and management control, we are ready to divest up to 49 per cent — but only if the Insurance Act gets passed in the Parliament,” Mr Ghosh said. He added that the foreign partner would support the company with its expertise and capital, besides help Reliance Life spread its operations outside India. Insurance Act Though the present Insurance Act only allows a foreign partner to have a 26 per cent stake, an amendment for increasing the cap to 49 per cent is awaiting Parliamentary approval. Sources said that with an approximate valuation of Rs 15,000 crore, the company could hope to get about Rs 1,500 crore through a 10 per cent stake sale. Already among the top four private sector insurers, it recently achieved a record sale of six million policies within the first five years. The company now hopes to break even in this fiscal, and double its market share in the next three years. Mr Ghosh said, “We're targeting a 10 per cent market share in the next three years to become one of the largest private insurers. We hope to compete with LIC by 2015.” He added, “We are trying hard to break even within this fiscal. We have reduced our costs significantly and if not this fiscal, we will certainly break even in 2011-12.” Market share A part of Reliance Capital, the insurer has sold the highest number of policies at 23.2 lakh in 2009-10, among the 22 other private sector companies. In terms of new business premiums, its market share in the year stood at 5.5 per cent, while among private players it was around 10.2 per cent. It is targeting an overall annual business premium of Rs 20,000 crore and assets under management (AUM) to cross Rs 30,000 crore in the next two years. He said that the company would infuse Rs 250 crore as capital in this fiscal, of which, Rs 70 crore has already gone in. Currently, Reliance Life has an AUM of Rs 136,77 crore. With 44 products on offer, the company has 1,247 branches across the country and 1.95 lakh agents. Of the overall distribution network, 43 and 45 per cent of the branches are in the rural and semi-urban areas, respectively. http://www.thehindubusinessline.com/2010/07/12/stories/2010071251540600.htm -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
