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Wednesday, Nov 10, 2004

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Insurers can invest in big ticket IPOs

Our Bureau

Hyderabad , Nov. 9

CLOSE on the heels of the new Government's decision to go in for further disinvestment in major State-owned corporate giants, the Insurance Regulatory and Development Authority (IRDA) has relaxed the investment guidelines for the insurance companies, especially with regard to the big-ticket initial public offers (IPOs).

The insurance regulator has decided to consider investments by insurance companies in IPOs of not less than Rs 500 crore as `approved investments'.

As per the current regulations in force, investment in equity shares through IPOs is categorised as `other than approved investments' and the insurance companies cannot invest more than 25 per cent in this category.

According to the IRDA Chairman, Mr C.S. Rao, the decision to relax the investment norms was taken following suggestions received from insurers to consider some relaxation in respect of big-ticket IPOs of well-known corporates where the issue size is fairly large and the corporates (issuers) are known to have good performance record and sound financials.

IRDA has,however, fixed certain conditions for considering investments in equity shares offered through IPOs as `approved investments'.

According to Mr Rao, equity shares have to be `listed' through IPO and the size of the issue of equity shares through IPO, including offer for sales, should not be less Rs 500 crore.

Further, the number of shares offered through IPO should not be less than 50 lakh shares.

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