ICICI Prudential Life, HDFC Standard Life plan to raise over $1 billion in two IPOs

SINGAPORE/MUMBAI (Reuters) - Two of India's leading private-sector insurers are looking to raise over $1 billion this financial year in the sector's first initial public offerings (IPOs), as insurance companies rush to take advantage of a change in ownership rules.

ICICI Prudential Life Insurance and HDFC Standard Life Insurance will likely be followed by SBI Life Insurance in reacting to a relaxation in foreign investment regulation last year that made share sales more feasible, in a country where most life insurers are part-foreign owned.

Asia's third-largest economy boasts a $50 billion insurance sector yet is home to relatively few people owning life insurance policies. With an increasingly wealthy middle class, insurers see plenty of room for growth.

"The business potential for insurance companies is large," said New Delhi-based R.K. Gupta, managing director at Taurus Asset Management.

"But too many players are in the market, competition is going up," he said. ICICI and HDFC are well-established and big enough to beat back rivals, he said.

ICICI Pru Life, a joint venture between India's ICICI Bank Ltd and Britain's Prudential PLC, is set to hire Bank of America Merrill Lynch and ICICI Securities for an IPO up to $700 million in size, Thomson Reuters publication IFR reported on Friday.

HDFC Standard Life, a venture of Indian mortgage lender Housing Development Finance Corp Ltd and Britain's Standard Life PLC, will hire Citigroup, JPMorgan, Kotak Investment Banking and Morgan Stanley to handle its IPO of up to $500 million.

SBI Life, a venture of State Bank of India and BNP Paribas Cardif SA [CAR.LM], could announce its intention to go public by March, its Chief Executive Arijit Basu told Reuters. An actual listing would be two years away, he said by phone.

ICICI Pru Life and ICICI Securities did not respond to Reuters requests for comment. Bank of America Merrill Lynch declined to comment.

WELL RECEIVED

Two dozen life insurers operate in a sector dominated by state-owned Life Insurance Corp of India.

Most insurers are joint ventures between local and foreign partners. The foreign ownership limit was raised to 49 percent from 26 percent in March last year, after which foreign partners raised their stakes in accordance with agreements made at the outset of many ventures.

With those agreements fulfilled, venture partners are now able to sell shares to the public.

"Investors have been anticipating Indian insurance IPOs for a while so these offers will be well received. It's a new asset class and one which has plenty of macro factors in its favour," said one senior Hong Kong-based financial institutions group banker.

ICICI Pru Life will add more banks to manage its IPO, IFR reported. ICICI Bank last week said it intended to file the IPO in the current financial year ending March 31.

The insurer was valued at 325 billion rupees ($4.9 billion) when it agreed to sell a 6 percent stake in two separate deals.

HDFC has said it aimed to sell a stake of up to 10 percent in the HDFC Life IPO.

($1 = 66.5550 Indian rupees)

(Reporting by S. Anuradha and Fiona Lau of IFR, Devidutta Tripathy in MUMBAI, Denny Thomas and Elzio Barreto in HONG KONG; Editing by Christopher Cushing)