The Reliance business smorgasbord will have one more to the Reliance stock market kitty – Reliance Life. RELLIF just might be the next stock market ticker from the conglomerate. Reliance Life which is now part of Reliance Capital is all set for a spin-off and possibly an IPO.
Reliance Life is the life insurance arm of Reliance ADAG - if it comes up with the IPO then it would be the first insurance company to be listed on the bourses in India. Reliance Capital is also planning to get into investment banking and will then be a complete non banking financial corporation. The only thing which Reliance doesn’t do is lend money to you and me.
The life insurance business closed the year ended 31 March with new-business premium worth Rs3,500 crore, an increase of 28% from the previous year.
Reliance Life’s valuation as per some estimates is between Rs 10,000- Rs12,000 crore. Size of the IPO is rumored to be 3000 crores.
Not so soon Mr. Ambani…
There is a reason why the life insurance companies are not yet listed. Not that they don’t need the money to run the business but IRDA has some restrictions. As per IRDA a company has to be in business for 10 years to go public. Reliance Life is only 6 years old.
Honestly that rule doesn’t make any sense. But a rule is a rule and all the companies are obeying it. Now there are already negotiations to reset the rule and come up with IPO framework.
When we sprinkle terms like policy, framework, negotiation and rule in any conversation, the bottom line is this – it will take time to have an outcome.
With the clout of Reliance it is very unlikely that it will wait for the policy makers. Instead it went to the finance minister to give them an exception. Knowing Reliance and the explosive growth they have seen will they get it or not is not the question we should ask. How soon will they get it is the question.
Why should any of this scare you?
Do you remember the Reliance Power IPO and what followed after that? I still have those nightmares. There is nothing which Reliance has done specifically for the things that followed. But tell that to Emmar MGF and this is what they would say- Reliance sucked all the money out of the market.
Though Reliance Power IPO is a mega IPO and Reliance Life doesn’t need as much money, there is a sentiment factor with IPO’s and the name Reliance itself. Sentiment works very well in India. Reliance Life needs some good IPO’s to preempt the IPO blues.
PS : Adani Group after a successful Mundra Port IPO are launching Adani Power IPO. This promises to be the blockbuster IPO of 2009.