Standard Life plans to sell 1.78% stake in HDFC Life Insurance

Standard Life, the joint-venture partner in HDFC Life Insurance, plans to sell 1.78 per cent stake (36 million shares) in the life insurance firm, at a floor price of Rs 390 via an offer for sale (OFS). The stake sale could fetch the JV partner Rs 1,400 crore on full subscription. 

In March, Standard Life had divested 4.93 per cent stake (99.5 million shares), in the life insurer to raise about Rs 3,600 crore.

At the end of March quarter, Standard held 24.66 per cent stake, while HDFC had 51.48 per cent in HDFC Life. Following the OFS, Standard will hold 22.88 per cent stake and the promoter holding in HDFC Life will decline from 76.14 per cent to 74.36 per cent, making it compliant with the 25 per cent public shareholding norm.

Standard Life has appointed DSP Merrill Lynch as the lead banker to manage the share sale. Earlier, BNP Paribas Cardif sold 9.2 per cent 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 firm got listed.

In Q4, the company’s total income increased to Rs 14,374.56 crore during the quarter, from Rs 8,134.61 crore a year ago. Moreover, its embedded value (EV) increased 20 per cent to Rs 18,301 crore at the end of March. Value of new business (VNB) rose 20 per cent to Rs 1,537 crore, against Rs 1,282 crore in the last fiscal year.

VNB is used to measure profitability of the new business written in a period. It is the current value of all future profits to shareholders measured at the time of writing of the new business contract.

The life insurer’s new business margin improved significantly in FY19 to 24.6 per cent, from 23.2 per cent in FY18. Shares of HDFC Life on Thursday ended 3.2 per cent higher at Rs 417. The share sale announcement was made after market hours.