INDIAN COMPANIES INSURE IPOS AGAINST FAILURE

An increasing number of companies planning a listing on the Indian exchanges are insuring against the failure of their plans and against possible litigation subsequent to the listing, reports Times of India . ICICI Lombard General Insurance executive Anuj Tyagi said that “over the last 15 to 16 months, the number of queries we are receiving for this cover has increased exponentially. It is the directors on the boards of companies that are asking for such covers and practically all the large IPOs (initial public offerings) are ensuring that they are insured”. He revealed that ICICI Lombard General Insurance had begun writing these covers in 2005 and 10 such covers had been written in this financial year from April 1 2007. Mr Tyagi said that other Indian players such as Tata AIG, Bajaj Allianz and the public sector insurers were also aggressive in the market. The policies usually run for about three to five years after listing. Rahul Agarwal of Optima Risk Management told Times of India that “it usually kicks in due to an erroneous omission or misrepresentation in the prospectus, based on which a shareholder can sue the company”.