Standard Life to raise stake in life co to 35%: Deepak Parekh

HDFC Chairman Deepak Parekh today said the Scottish partner in its life insurance arm is keen to hike its stake to 35 per cent from the current 26 per cent following the new insurance law that raised foreign holding cap to 49 per cent.
The company may look at coming out with a share sale for the remaining 14 per cent stake in the 15-year-old HDFC Standard Life, Parekh said.
"We have still not finalised with Standard Life. But they have indicated that they would like to take up to 35 per cent. From 26, go up to 35 per cent. There, we will have some possibility of an IPO because we will then have a gap of 14 per cent," Parekh told shareholders at HDFC's annual general meeting here this evening.

HDFC Vice-Chairman Keki Mistry later said HDFC will formally announce the stake hike by Standard Life only once the decision is final, which will take up to four more weeks.
Parekh said there are a slew of procedural issues, on which clarity is still required, including the definition of what is meant by "Indian control and management" by the sector regulator IRDAI.
A public issue can happen only after such clarity emerges, he said, adding that an IPO is at least one year away.

Parekh said the company sold only 1 per cent equity to businessman Azim Premji, "even though he wanted more". The sale also helped in price discovery for the unlisted company.

Parekh, however, was categorical that as and when an IPO happens, existing shareholders will get stake in the life arm at a premium, saying drawing a parallel with the IPO of HDFC Bank is "unfair" as the bank was a start-up at the time of the public issue.
He added that there is no question of an IPO in its non-life venture HDFC Ergo as its foreign partner has already said it will hike its stake to the increased cap of 49 per cent.
Replying to specific queries on the long-speculated merger of HDFC Bank with the parent, Parekh said there is nothing on the table at present.

Mistry later said they may consider a merger only if it gets exemptions on the classification of loans and liabilities of the past, and calculation of mandatory ratios like CRR and SLR is done only on the loans and liabilities written after the merger.
"If the existing balance sheet could be grandfathered and we were allowed to create CRR, SLR and PSL only on new loans that we write and new deposits that we get, then obviously it would be great," he said.
Parekh said he is positive on the housing finance sector, and that initiatives like affordable housing and smart cities will be of help. He is of the view that it will take at least 2-3 years for a realty regulator to be operational.