Foreign investors are likely to reduce their stake in insurance joint ventures on listing if the government sticks to its norm that all listed companies must have 25% public shareholding, report media.

A senior official of Insurance Regulatory and Development Authority (IRDA) reportedly said Indian promoters were to hold a minimum of 51% stake in insurance companies. An Insurance Amendment bill seeking to raise the foreign direct investment (FDI) limit to 49% was pending before Parliament. If the norm of 25% public shareholding remained unchanged, the foreign investors would have to reduce their share-holding and dilute their stake, say trade circles.
Currently, insurance companies hold 74% in joint ventures  while the rest is owned by foreign partners. However, the government hinted that this was open for review.

As per the Insurance Act, the participants could enter the capital market only after completing ten years of operations. The IRDA was also working out the modalities of the initial public offers (IPOs). The regulator suggests that both the partners could dilute the stake proportionately when they would go public.

HDFC Standard Life and ICICI Prudential are to complete ten years operations in a few months. Anil Ambani-promoted Reliance Life is keen to tap the capital market to raise funds.

Tata AIG, Reliance Life, Shriram Life and ING Vysya Life Insurance would welcome the government's move on 25% public share-holding, as their foreign partners are either looking to dilute their stakes in Indian joint ventures or they are 100% owned by the Indian promoter.