Bank of Baroda will divest up to a 12.5% stake in the insurance arm IndiaFirst Life Insurance Company through an offer for sale in the initial public offer (IPO) of the insurer or any other mode. The Bank’s board of directors in a meeting on Saturday approved 12.5% of shares divestment in IndiaFirst Life.
However, the bank’s shareholding in the life insurance subsidiary will not fall below 51%. The bank said the divestment will take place by way of offer for sale in the proposed initial public offer of IndiaFirst or through any other method permissible under the law, subject to market conditions and approval of market regulator Sebi, Reserve Bank of India, and Insurance Regulatory and Development Authority (Irdai), and other authorities.
Mumbai-headquartered IndiaFirst Life was a joint-venture among Bank of Baroda, Carmel Point Investments India, and Union Bank of India. The insurer is a subsidiary of the Bank of Baroda. Carmel Point Investments India, owned by private equity funds managed by Warburg Pincus LLC, holds a 26% stake in the insurer. Union Bank of India is the company’s third strategic partner (9% stake).
In the previous fiscal year (2021-22), Bank of Baroda (BoB) acquired a 21% stake in the insurance company following a ‘right of first offer’ (ROFO) by Union Bank of India to the existing shareholders of IndiaFirst Life, following which it has become a subsidiary company of BoB.
BoB’s holding in the company now stands at 65% from 44% earlier. Union Bank acquired a stake in IndiaFirst Life by way of the merger of Andhra Bank into it in April 2020. During FY22, IndiaFirst Life was the fastest growing life insurer in individual new business premium APE (Annual Premium Equivalent) income at 50% yearly growth with a 2.4% private market share. It grew at 3.2 times the overall life insurance industry including LIC.
It also improved its ranking by 1 position to 11th in terms of individual new business APE among the private peers as compared to last year. The assets under management (AUM) stood at ₹18,932 crore as on 31st March 2022.
Separately, BoB on Saturday announced its June quarter result. The state-owned bank reported a 79.3% rise in its standalone profit after tax (PAT) to ₹2,168 crore on higher growth in net interest income (NII).
The Bank of Baroda’s Net interest income (NII) increased by 12% to ₹8,838 crore in Q1 2022 as against ₹7,892 crore in the year-ago period.
While the bank booked a treasury loss of ₹588 crore in the quarter.
Bank of Baroda recovered ₹1,740 crore of bad loans and upgraded ₹859 crore of loans, according to the investor presentation. The lender has set a recovery target of ₹13,000 crore in FY2023.
