India insurance regulator proposes to allow private equity funds in insurance

Private equity funds may invest as a promoter or an investor.

The Insurance Regulatory and Development Authority of India is proposing a draft to allow private equity funds to invest in insurance and reinsurance as either a promoter or investor.

A private equity fund may only invest as a ‘promoter’ only if it has completed 10 years of operations and the funds raised by the fund including its group entity or entities are around $500m or more. It must also have investible funds available with the PE fund to be not less than $100m and that it has invested in the financial sector in India or other jurisdictions.

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Additionally, the amendment also proposes that an investment made in an insurance or reinsurance entity, in the capacity of promoter or investor at the time of or before the grant of certificate registration (R3), shall have a locked-in period of five years. An investment made within five years after the grant of the R3 status, meanwhile, will have a lock-in period of five years or eight years from the grant of the R3, whichever is earlier.

The IRDAI has asked stakeholders and the general public to share views and comments on the draft by 3 November.