Standard Life has raised its stake in an Indian life insurance joint venture to 26 per cent ahead of a proposed flotation of the business on the Indian stock exchange in 2009.
Standard Life has acquired an additional 7.15 per cent stake in HDFC Standard Life Insurance Company for pound 25.7m ($51m) from Indian partner Housing Development Finance Corporation, a mortgage finance company.
This takes its holdings to the maximum permitted under Indian law.
The acquisition was described by Standard Life as a means to value the business before an initial public offering of a minority stake scheduled for 2009.
The price was derived from a formula set out in the joint venture agreements.
"We are planning to IPO around 10 per cent of the company before the end of 2009," Standard Life said. "The primary reason for this is to attach a market value for the joint venture to help this."
The proposed flotation will raise further capital for expansion. Stock exchange rules require that public companies offer a minimum of 10 per cent of shares for a listing.
Standard Life said that it was keen to increase its holding above the 26 per cent ceiling that exists on foreign ownership, adding that it hoped for a change to the Indian law on foreign ownership of life insurers.
"We would ideally hope to have parity of shareholding as soon as we can, Indian legislation permitting," said Standard Life.
"We think there are huge growth opportunities for this business in the Indian market." The company pointed to recent analyst notes that valued HDFC Standard Life up to pound 2.5bn.