Insurance regulator IRDAI allows PE funds to exit smoothly as promoters

The Insurance Regulatory and Development Authority of India (IRDAI), besides enabling direct entry of private equity funds into insurers, has also made exits smoother for PE/VC Funds that are 'promoters' of unlisted and listed insurers. PE players who have taken up the 'promoter' role in insurers can now dilute their holding up to 26% in listed companies which have a satisfactory five year solvency track record. Till now, the rule was that 'promoters' of insurers needed to maintain minimum shareholding of 50% in an insurer at all times (or if already below 50%, then such holding was minimum holding). Now a carve out (proviso in regulations) has been made to facilitate dilution of promoter holdings to 26% in case of certain listed companies.