Comments
Bank of India (BOI) on Tuesday said it has sold 18 per cent stake in Star Union Dai-ichi Life Insurance Company to joint venture partner Dai-ichi Life Insurance Company (DILIC). Post the stake sale, BoI’s stake will get diluted to 30 per cent while that of Japanese life insurer Dai-ichi Life will go up to 44 per cent, according to the bank’s stock exchange filing.
Union Bank of India, the third joint venture partner, continues to hold 26 per cent stake in Star Union Dai-ichi (SUD) Life Insurance Company, which was incorporated as a three-way JV in 2007.
BOI, however, did not disclose the sale value in its stock exchange filing. DILIC, in a separate statement, said: “As a result of deliberation to increase the shareholding, following the deregulation of foreign ownership limit which came into effect in March 2015, the company has reached an agreement on purchasing additional 18 per cent stake in SUD from BOI (approximately ₹540 crore), and increasing its ownership in SUD to 44 per cent.”
FDI capThe stake sale comes in the backdrop of foreign direct investment in the insurance sector being relaxed, whereby foreign insurers can up their stake to 49 per cent from the earlier cap of 26 per cent.
The stake sale should also be seen in the context of the government asking public sector banks to sell their investments in non-core assets to garner capital.
In terms of the JV agreement between BOI, Union Bank of India and DILIC, the Japanese life insurer has an option to purchase 18 per cent additional stake upon “change in law” permitting overseas investors to hold more than 26 per cent stake.
BOI said DILIC has since exercised the call option to acquire the said stake from it.
Hence, shareholding of DILIC will be 44 per cent, up from 26 per cent, upon completion of the transaction after receiving necessary statutory/regulatory approvals.
BOI has a corporate agency arrangement with SUD Life for sale of their life insurance products.
According to the financial reporting of interests in JVs for 2015-16, BOI’s investments include ₹120 crore, representing its 48 per cent holding in SUD Life.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.