Divide And Flourish

The Insurance Regulatory Development Authority (IRDA) is in talks with the Reserve Bank of India (RBI) to hive off insurance subsidiaries of banks. While this will save banks from the burden of supporting their capital-intensive insurance subsidiary, it will give insurance firms the freedom to determine the kind of capital they would like to raise for expansion.

ICICI Prudential, say sources, is preparing to go public. Others such as Canara HSBC Life and Reliance Capital have met investment bankers to raise money. "The insurance industry is expanding and it needs enormous capital to build business and penetrate at the same time," says S.B. Mathur, secretary-general of the Life Insurance Council. Current regulation allows insurance firms to list in year 10. The situation will heat up when FDI in insurance is opened up to 49 per cent because the Indian promoters may then become a minority stakeholder.

-----------------------------------------------------------------------------------------------------------------

STRICTLY BUSINESS

Britain's airport operator BAA has sold the Gatwick airport, the second busiest in the UK after Heathrow, to US-based investment fund Global Infrastructure Partners for £1.51 billion ($2.50 billion or Rs 11,684 crore). BAA announced its plan to sell Gatwick following a Competition Commission investigation into the company's monopoly over air travel in London.

(This story was published in Businessworld Issue Dated 02-11-2009)

---