Canara Bank shares in focus as Sebi clears life insurance arm’s IPO plans

Canara Bank shares are likely to be in focus on Tuesday after the lender announced that its subsidiary, Canara HSBC Life Insurance Company, has received an observation letter from the Securities and Exchange Board of India (Sebi) to proceed with its initial public offering (IPO) and file its Updated Draft Red Herring Prospectus (UDRHP).

The proposed IPO will be an offer for sale (OFS) of up to 23.75 crore equity shares with a face value of Rs 10 each. Of this, Canara Bank plans to offload up to 13.77 crore shares, HSBC Insurance (Asia-Pacific) Holdings will sell up to 47.50 lakh shares, and Punjab National Bank, an investor shareholder, will offer up to 9.5 crore shares.

Canara HSBC Life Insurance is a private life insurer jointly promoted by Canara Bank and HSBC Insurance, with Punjab National Bank as a shareholder.

About the life insurance arm

Founded in 2007, the company has emerged as one of the prominent bank-led players in India’s life insurance sector. According to its draft prospectus, it ranked second among public sector bank-led life insurers in terms of the number of lives covered in FY24.

It also held the third-highest assets under management (AUM) among public-sector-promoted life insurers as of March 31, 2024, according to a CRISIL Report cited in the draft prospectus. The insurer further ranked among the top five bank-led life insurers by number of lives covered in FY24.

The company has reported robust profitability growth. Its profit after tax (PAT) rose at a compound annual growth rate of 232.61%—from Rs 10.24 crore in FY22 to Rs 113.32 crore in FY24. For the nine months ended December 31, 2024, PAT stood at Rs 84.89 crore. Its Annualised Premium Equivalent (APE) has also shown consistent growth, the draft papers noted.

The issue will be managed by SBI Capital Markets, BNP Paribas, HSBC Securities & Capital Markets (India), JM Financial, and Motilal Oswal Investment Advisors.

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