Insurance regulator IRDA on Thursday came out with guidelines allowing life insurance companies, which have been in business for over 10 years, to raise funds from the public through IPOs.
The Insurance Regulatory and Development Authority (IRDA), however, will decide the size of the public issue, it said in a notification.
Why private life insurers are struggling to find their groove
As per the guidelines, promoters of the insurance companies will also be allowed to offload their stake in the company.
The insurance companies, which will become eligible to come out with the initial public offerings (IPOs), include ICICI Prudential Life, HDFC Standard Life and SBI Life .
IRDA would prescribe "the extent to which promoters shall dilute their respective holding, the maximum subscription which could be allotted to any foreign investors", said the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011.
IRDA, it added, would prescribe a lock-in period for the promoters to prevent them from exiting the company.
The regulations stipulate that no life insurance company should approach market regulator SEBI for IPO without seeking prior approval of the IRDA.
After the insurance sector opened up in 2000, 23 private companies have entered the life insurance business.
While a few companies would immediately become eligible for IPOs, the remaining would have to wait for completion of 10 years of operations.
Commenting on the guidelines, HDFC Standard Life MD and CEO Amitabh Chaudhry said, "It will take some time before companies actually come out with public issues. IRDA has given a lot of flexibility to the insurers in the guidelines."