Il & Fs Likely To Firm Up Life Risk Venture By Nov

Infrastructure Leasing & Financial Services (IL&FS) is expected to foray into life insurance by tying with an European insurance major by November.

"The fallout of the events of September 11 and the economic slowdown is the reason for the delay in our plans to enter life insurance. We are however confident of tying up with an European major by Diwali," Vimal Bhandari, executive director, said. He, however, refused to spell out any names.

The financial institution feels that the first-mover advantage which 10 other companies enjoy has no relevance in life insurance as it takes about seven years to break even. Besides, India is large enough to accommodate more players.

On the institution's long-term strategy, Bhandari said, "We intend capitalising on the synergy arising from asset management, pension and life insurance businesses".

With life insurance premiums expected to grow to Rs 1,48,000 crore by 2009-2010 and the pension business to around Rs 14,000 crore as per a Confederation of Indian Industry study, he felt that there was enough room for everybody to grow.

Bhandari said that only two of the world's top 10 insurance players had entered the country and that IL&FS will rope in one of the remaining eight as its life insurance partner.

With very few primary offerings, buybacks restricted to only multinationals, stiff competition in project advisory services and a distinct slowdown in mergers & acquisitions (M&As), the institution is banking on toll road projects of the National Highways Authority of India to fuel growth.

Elaborating on M&As, Bhandari said, in India M&As were mostly on a cash basis in contrast to the west where a combination of stock and cash or only stock was involved. He diagnosed the mindset in the country to lack of promoters confidence in the paper of the company to whom they are ceding (selling) stake.