Canara HSBC Life Insurance public issue to raise nearly ₹2,500 crore

The life insurer's Rs 2,500-cr IPO is an offer for sale by existing shareholders, with CEO Anuj Mathur saying no fresh capital is needed for expansion

Canara HSBC Life Insurance is raising nearly ₹2,500 crore through offer for sale (OFS) owing to stake dilution from its existing shareholders, said managing director (MD) and chief executive officer (CEO) Anuj Mathur.

 

Mathur added that the company has sufficient internal funds to support growth initiatives.

 

With the ₹2,500-crore OFS, the shareholders — Canara Bank, Punjab National Bank and HSBC Insurance will offload their stake.

 

Post the offering, the share of Canara Bank will come down from 51 per cent to 36.5 per cent and PNB’s stake will reduce to 13 per cent from 23 per cent.

 

HSBC Insurance’s stake will come down to 25.5 per cent from 26 per cent.

 

The price band is set at ₹100-106 for shares with a face of value ₹10.

 

The initial public offering (IPO) will open for subscription on October 10 and close on October 14.

 

SBI Capital Markets, BNP Paribas, HSBC Securities and Capital Markets (India) Private Limited, JM Financial and Motilal Oswal Investment Advisors are the book-running lead managers.

 

“Proceeds from the fundraise will go to the shareholders to the extent of their dilution. As a company, we are fairly capitalised and if you see our solvency ratio, it is over 200 per cent. We are fairly comfortable in terms of funding our growth initiatives. We have sufficient internal accruals. We have sufficient profits within the company, which we are deploying. So, as a company, we don't need fresh capital as of now,” Mathur said.

 

Net profit of the company increased to ₹116.98 crore in FY25 compared to ₹113.31 crore in FY23. The solvency ratio stood at 216 per cent.

 

The gross written premium of the insurer was ₹8027.46 crore at the FY25, as compared to ₹7128.7 crore.

 

Mathur expects the bancassurance-backed life insurer to outgrow the industry backed by bancassurance and alternative channels.

 

He said, “Bancassurance is actually a very good business model as it is a low-cost acquisition model. Now, it is very clear that banks will propel insurance penetration in the country. The regulator and the government are also very supportive. Also, we have recently launched an agency channel. With the launch of the agency, it's very obvious that this pie will grow. That is how the channel mix will evolve over a period of time,”

 

Currently, Canara Bank, HSBC and seven regional rural banks account for 90 per cent of the bancassurance channel, while alternative channels have 8 per cent share.

 

“We feel that the demand for insurance will go up and the whole industry will expand. We are better placed within the industry to capitalise on the opportunity which is going to emerge from Tier II, III and IV cities,” Mathur added.