IDBI Bank Ltd has said its board has approved a proposal to resume the process of divesting its stake in a life insurance joint venture.
IDBI Federal Life Insurance Co. Ltd is a three-way joint venture between IDBI Bank, Federal Bank and Belgian insurer Ageas. IDBI holds 48% stake, while Federal Bank and Ageas own 26% each.
“In continuation of IDBI Bank’s earlier disclosure dated February 21, 2017, we hereby advise that the board of directors of IDBI Bank at its meeting held on Monday, January 21, 2019 has approved in-principle, the proposal to re-initiate divestment process of IDBI stake in IDBI Federal Life Insurance Co. Ltd subject to statutory/regulatory approvals, if any, required to be obtained in this regard,” the bank said in a regulatory filing.
Mint reported last year that IDBI could raise around ₹3,000 crore by selling its stake in the insurance company at a valuation of ₹ 6,000 crore.
IDBI’s announcement follows Life Insurance Corp. of India’s announcement on Monday that it has completed the acquisition of a 51% stake in the bank, making it the lender’s majority shareholder.
IDBI joins other state-owned lenders that are in the process of monetizing their shareholding in insurance joint ventures.
On 28 November, Mint reported that Oriental Bank of Commerce has begun the process of selling its 23% stake in Canara HSBC Oriental Bank Life Insurance Ltd, hiring ICICI Securities as the manager to a potential sale. The sale could fetch the bank about ₹1,500 crore, the report said.
In December, state-run lender Andhra Bank said it had floated a request for proposal to hire a valuer and an investment banker to sell its stake in IndiaFirst Life Insurance Co. Ltd. Andhra Bank owns a 30% stake in IndiaFirst Life, while Bank of Baroda holds 44% and private equity firm Warburg Pincus owns 26%. Warburg had bought the stake from Legal and General Group Plc for an undisclosed sum in June.
Mint also reported last week that Insurance Australia Group is considering selling a stake in SBI General Insurance, a joint venture with State Bank of India. On Monday, IDBI Bank shares closed 3.2% lower at 56.50 per share on BSE, compared with a 0.53% rise in the benchmark Sensex.
Source: Mint