Public shareholding

HDFC Life restores free float after $451m block sale

Public shareholding in India’s largest life insurer went above 25% after the UK insurer sold 3.3% stake through an OFS.

 Standard Life Aberdeen sold Rs32.2 billion ($451 million) worth of HDFC Life Insurance shares through an offer for sale on Wednesday in a move that is intended to help its Indian partner increase its free float to meet regulatory requirement.

The British insurer divested 67 million shares in HDFC Life, India’s largest life insurer by market capitalisation, and brought its shareholding to 19.69% from 23.02%.

HDFC shares were picked up throughout Wednesday at an average price of Rs480.7 each, which was towards the bottom end of the Rs477.8 to Rs493.4 marketed price range.

National Stock Exchange data shows that US investment fund Capital Group took about 14 million shares, or about one-fifth of the shares on offer. Other bidders were not identified.

The transaction marks the third selldown by Standard Life in the Indian Life insurer this year. In April, the firm raised $202 million from the sale of a 1.8% stake, a month after it reaped $510 million from the sale of a 4.9% interest.

All these divestments were intended to help HDFC Life meet the 25% minimum public shareholding requirement. Following Wednesday’s stake sale, HDFC Life’s free float increased to 25.64% from 23.86%.

The Indian government is mulling to increase the public shareholding requirement to 35% in a bid to boost liquidity in the secondary market. The proposal was included in finance minister Nirmala Sitharaman’s government budget earlier this year.

The offer for sale was arranged by Bank of America Merrill Lynch.

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