FDI hike in insurance: Giving exit to big players

The rise in FDI limit is certainly good news for large Indian insurance companies, such as HDFC Life and Prudential ICICI Life Insurance, that were desperately looking for an opportunity to encash their holdings after over 10 years of investment in the business. Their investment would also fetch good valuation as most of them are now profit making.

"World-over it's been seen that the promoters have reaped benefits from the stake sale and the money has not come into the business," says Deepak Mittal, MD & CEO of Edelweiss Tokio Life Insurance.

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However, this is good news for the smaller and new players who will now rethink their strategy. Smaller players, struggling to grow the business, can now put in fresh money from the stake sale in the high capital intensive life insurance business in India.

While the FDI hike has been a positive step, one will have to wait for the fine print.

"We have to wait and watch as the insurance bill will have to be passed in the parliament before the stakes can be hiked by foreign partners," says Mittal.

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