IDBI Bank Enters Into Pact With Partners To Divest 27% Stake In Insurance JV For Rs 595 Crore
A pedestrian walks past an IDBI Bank Ltd. automated teller machine (ATM) branch in Jaipur (Photograph: Sanjit Das/Bloomberg)

IDBI Bank Enters Into Pact With Partners To Divest 27% Stake In Insurance JV For Rs 595 Crore

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IDBI Bank Ltd. on Thursday said it has entered into a share purchase agreement with the other two joint venture partners in IDBI Federal Life Insurance Company, to divest 27% of its stake for Rs 595.30 crore.

In June, the private sector lender had informed about the stake sale-purchase proposal among the three JV partners.

"IDBI Bank has entered into an SPA with Ageas Insurance International NV and the Federal Bank Ltd. on Aug. 5, 2020, wherein IDBI Bank Ltd. has agreed to sell up to 27% stake in its joint venture IDBI Federal Life Insurance Company Ltd. to these buyers," the bank said in a regulatory filing.

Under the SPA, 23% of the stake would be sold to Ageas and 4% to Federal Bank, said the private sector lender.

The transaction would be concluded subject to regulatory approvals, IDBI Bank said.

Currently, LIC-promoted IDBI Bank holds 48% in IFLIC, while Federal Bank and Ageas hold 26% each.

"IDBI Bank is expected to receive up to Rs 595.30 crore from sale of up to 27% stake in IFLIC,," said the lender.

The bank will receive Rs 507.10 crore by selling 23% stake to Ageas, and Rs 88.19 crore by selling 4% to Federal Bank, IDBI Bank added.

In a separate filing, Federal Bank said it will purchase up to 4% stake in IDBI Federal Life Insurance Co. Ltd. from IDBI Bank at a price not exceeding Rs 27.56 per equity share.

"The bank currently holds 26% stake in IFLIC, making it an associate of the bank. Post-purchase, the total stake will increase up to 30%," Federal Bank said.

IDBI Bank said the transaction is expected to be completed by Dec. 31 this year, subject to regulatory approvals and satisfaction of the terms and conditions set out in SPA.

Ageas Insurance International NV is one of Europe's large insurance companies.

IFLIC's asset size stood at Rs 9,979.95 crore as on March 30, 2020, and the turnover was Rs 170.76 crore.

The transactions have been triggered primarily by life insurance behemoth LIC buying a majority stake in IDBI Bank last year, due to which the lender is reducing its stake in the venture.

Shares of IDBI Bank on Thursday closed at Rs 39.30 apiece on the BSE, up 0.90% from the previous close, while the Federal Bank counter ended 0.19% up at Rs 52.45.

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