MUMBAI: IDBI Bank on Saturday said it will sell part of its stake in IDBI Federal Life Insurance to Belgian multinational insurance company Ageas Insurance and Federal Bank. Ageas will acquire 23% stake, while Federal Bank will buy 4%, the lender said in a disclosure to the stock exchanges.
The entire stake sale is valued at ₹595 crore. The sale will be completed post all regulatory clearances.
IDBI Bank has 48% stake in the life insurance company, while Federal Bank and Ageas Insurance have 26% each. After the completion of the stake sale, IDBI Bank's share in the insurance entity will fall to 21%.
The intent to sale stake in the insurance company was first announced in February 2017. The plan was, however, shelved and revived in April this year.
Last January, Life Insurance Corporation India (LIC) had acquired a 51% stake in IDBI Bank, ending uncertainty over the future of the lender which had been running into losses for several consecutive quarters.
The stake sale of IDBI Bank’s insurance venture was imperative due to regulatory requirements. India's insurance laws do not allow an insurance company to own a significant stake in a rival insurer. Given LIC’s stake in IDBI Bank, it was exerting an indirect ownership and control in IDBI Federal Insurance.