IRDAI (Investment by Private Equity Funds in Indian Insurance Companies) Guidelines, 2017
Insurance Regulatory and Development Authority of India (IRDAI) vide notification dated December 05, 2017 has issued IRDAI (Investment by Private Equity Funds in Indian Insurance Companies) Guidelines, 2017. These guidelines shall be applicable to all unlisted Indian insurance companies and to the Private Equity Funds who have invested in the unlisted Indian insurance companies either as investor or as promoter.
• The guidelines set a ceiling of 10% in insurance companies for investors. As an investor, a fund can invest up to 10% of the paid up equity of an insurance company.
• The Indian investors, including PE funds, jointly should not hold more than 25% of paid-up equity share capital of the company. In case of the PE investment through Special Purpose Vehicle (SPV), the minimum shareholding of promoters and promoter group should at all-time be maintained at 50% of the paid-up equity capital. In cases where the minimum holding is less than 50%, it should be maintained at those levels.
• In case of one-time investment, the private equity fund will have to make an upfront disclosure. The regulator said that after the lock-in period of 5 years, an undertaking of thedivestment plan, preferably through an IPO, should be submitted.