IDBI Bank to sell entire stake in Ageas Federal Life Insurance Company to JV partner Ageas for Rs 580.20 cr; Ageas will become first foreign investor to hold maximum FDI permissible limit of 74%.
IDBI Bank, which has been identified by the government for divestment, is in the process of exiting from its insurance joint venture business.
The lender has entered into an agreement with Ageas Insurance International NV (Ageas) to sell its entire stake in the joint venture Ageas Federal Life Insurance Company Ltd (AFLI) for Rs 580.20 crore.
As per the share purchase agreement, IDBI Bank will sell the entire stake of 20 crore shares to Ageas pursuant to exercise of call option by the latter. The lender said in a regulatory filing to the stock exchanges that it
As of 31 March 2022, LIC-controlled IDBI Bank holds 25% stake in AFLI. Ageas is one of Europe’s largest insurance firms.
With the acquisition, Ageas’ stake will rise to 74% in the joint venture. It will become the first company in the life insurance sector where the foreign partner will have a shareholding at the maximum permissible limit.
Federal Bank will maintain its 26% shareholding in AFLI.
AFLI, which received an IRDA licence in 2007, is a joint venture between IDBI Bank, Federal Bank and Ageas.
IDBI Bank said that the transaction is expected to be completed in the second quarter of the current fiscal year 2022-23, subject to regulatory approvals and satisfaction of the terms and conditions set out in the agreement.
“IDBI exits as a shareholder but remains a distribution partner. This transaction is a second step up for Ageas after the increase of its stake from 26% to 49% in December 2020,” Ageas said.
“This investment aligns with Ageas’s strategy to expand in regions in which it is already present and in promising markets with a low insurance penetration and high potential for growth such as the Indian Life insurance market,’’ the insurer added.
Ageas concentrates its activities in Europe and Asia.
AFLI, which began operations in 2008, posted a net profit of Rs 94 crore in FY22. This became the 10th consecutive profitable year for the private sector insurer, beginning FY13. The life insurance company reported profit in the first of operations itself.
Earlier this week, IDBI Bank divested its entire stake of 19.18% in ARCIL to Avenue India Resurgence Pte. Ltd for an undisclosed amount.
