HDFC Life, a joint venture between HDFC and Standard Life of UK, is likely to seek a valuation in excess of Rs15,000 crore from the capital market, though its public issue will not debut before 2013, Amitabh Chaudhry, MD and CEO, HDFC Life told HT.
“If you see, the shareholders have invested at Rs75 per share, which gives us a valuation of Rs15,000 crore. So the expectation would be to list slightly higher than that,” he said.
He said the company could seek dilution of equity by bringing in another partner. “We can reduce the stake by going public, or by selling it to someone. I think the better option for us is to sell to someone than to sell in the market,” said Chaudhry.
He admitted that market conditions at present did not warrant the desired valuation. “I see no visibility for the next 12 months. Besides, our capital requirements have come down,” said Chaudhry.Private sector insurers saw a contraction of 43% in new businesses in the first half of 2011-12.
“HDFC Life has seen a de-growth of 26% in April-September this year, though our renewal premiums have grown 11%,” he said.
“However, we have seen an increase in November and expect the year to end even-stevens,” Chaudhry said.
The slowdown has also impacted the profits of HDFC Life, down to Rs21 crore for the six months ended September against a guidance of Rs60-70 crore, Chaudhry said. However, the number of policy surrenders has come down.
In 2010-11, it saw Rs2,000 crore worth of policies surrendered — a four-fold rise over the previous fiscal. However, in 2011-12 year-to-date, Chaudhry said the company has only seen Rs1,100 crore worth of policies surrendered, compared to Rs1,400 crore in corresponding period last fiscal.
HDFC Life has also cut down on its staff strength and branch network to 470 from 500 last year. “The branches were not financially feasible, though we intend to increase our branch network once recovery occurs, which could be over the next three years,” said Chaudhry. Even so, he did not foresee an addition of more than 100-110 branches.