Canara HSBC Life Insurance files for IPO; Canara Bank, PNB to sell shares via OFS

Life insurer Canara HSBC Life Insurance Company has filed preliminary papers with the capital market regulator Securities and Exchange Board of India (Sebi) to launch an initial public offering (IPO). The IPO of the life insurance company, a joint venture between state-owned Canara Bank and HSBC Group's HSBC Insurance (Asia Pacific) Holdings, is completely an offer for sale (OFS) by existing shareholders, with no fresh issue component.

As per the DRHP filed with the regulator, the insurer plans initial share sale of up to 23.7 crore equity shares of value of ₹10 each by existing shareholders - Canara Bank, HSBC Insurance (Asia-Pacific) Holdings Limited, and Punjab National Bank (PNB). Canara Bank will disinvest 13.77 crore equity shares, while HSBC Insurance and PNB will pare 4.75 crore shares and 9.5 crore shares, respectively.

Currently, promoter entity Canara Bank holds 51% stake, followed by 26% shares by HSBC Insurance (Asia-Pacific) Holdings, and 23% by PNB.

As the issue is solely an OFS, the company will not get any proceeds from the public offer, and the money raised will go selling shareholders.

BNP Paribas, SBI Capital Markets, HSBC Securities & Capital Markets, Motilal Oswal Investment Advisors and JM Financial are the issue's book-running lead managers. The shares are proposed to be listed on the Bombay Stock Exchange and National Stock Exchange.

Incorporated in 2007, Canara HSBC Life Insurance ranked amongst the top five banks led life insurers and are second highest amongst public sector bank led life insurers in India based on the number of lives covered for fiscal 2024, as per CRISIL report cited in the DRHP.

Its profit after tax has increased at a CAGR of 232.61% from ₹10.24 crore in fiscal 2022 to ₹113.32 crore in fiscal 2024 and was ₹84.89 crore in the nine months ended December 31, 2024. The company has provided coverage to 9.23 million lives as at December 31, 2024. Together, both Canara Bank and HSBC India have contributed a significant portion of its new business premium, accounting for 82.53%, 70.69%, 72.44%, 53.09%, and 60.32% of the new business premium during the nine months ended December 31, 2024, December 31, 2023 and fiscals 2024, 2023 and 2022, respectively.

The development came days after investment management firm Canara Robeco Asset Management Company filed a DRHP with the Sebi for its IPO. The issue will be a pure OFS of 4.98 crore equity shares, under which Canara Bank and ORIX Corporation Europe NV will offload 2.59 crore and 2.39 crore shares, respectively. As of now, Canara Bank holds a majority stake of 51% in Canara Robeco AMC, while Orix Corporation owns the remaining shares in the company.

SBI Capital Markets Ltd, Axis Capital Ltd and JM Financial Ltd are the book running lead managers to the issue. The company's shares are proposed to be listed on the BSE and NSE.