PNB, Canara Bank to dilute stake in Canara HSBC Life Insurance through IPO

Company files DRHP; Canara to dilute 14.5% stake while PNB will dilute 10% stake

Canara HSBC Life Insurance on Tuesday filed a Draft Red Herring Prospectus (DRHP) for an initial public offering (IPO), through which its promoters—Canara Bank and HSBC Insurance (Asia Pacific) Holdings—along with state-owned Punjab National Bank (PNB), will divest a portion of their stake in the company.

 

Canara Bank, which holds a 51 per cent stake in the company, plans to sell up to 137.75 million shares, representing 14.5 per cent of its shareholding. HSBC Insurance, holding a 26 per cent stake, intends to dilute just 0.5 per cent of its stake. Additionally, Punjab National Bank (PNB), which owns 23 per cent of the company, is looking to divest 10 per cent of its stake.

 

The private sector insurer has not specified the size or the timing of the IPO.

 

In December, Canara Bank had received approval from the Reserve Bank of India (RBI) to dilute stake in both its life insurance and mutual fund arms. In March 2025, PNB also sought RBI’s approval to sell a 10 per cent stake in the life insurance company during the listing.

 

Currently, there are five listed life insurance companies — Life Insurance Corporation of India (LIC), SBI Life Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, and Axis Max Life Insurance.

 

The insurance regulator has been nudging companies that have vintage and pedigree to list on the bourses to bring greater transparency and more value to policyholders and investors.

 

Canara HSBC Life Insurance was incorporated in September 2007 as a joint venture between Canara Bank, HSBC, and Oriental Bank of Commerce, which was later merged with PNB. It started its operations in June 2008.

 

According to the DRHP, the life insurer posted nearly 24 per cent year-on-year (Y-o-Y) growth in net profit to Rs 113 crore in FY24. The total annualised premium equivalent (APE) was marginally up to Rs 1,887.79 crore as against Rs 1,883.7 crore in FY23. The value of new business (VNB) stood at Rs 377.6 crore while VNB margin was at 20 per cent.

 

The 13th-month persistency stood at 80.73 per cent as against 75.33 per cent in the year-ago period. The 61st-month persistency was at 55.34 per cent as against 51.97 per cent in FY24.

 

The solvency ratio of the insurer was at 212.83 per cent at the end of March 31, 2024, as against 251.81 per cent.

 

According to the latest Life Insurance Council’s data, the insurer recorded 7.69 per cent Y-o-Y growth in premium to Rs 3,055.19 crore in FY25.

 

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