IDBI Bank on Friday said it has entered into a pact with Ageas Insurance International NV to sell its entire stake in the joint venture Ageas Federal Life Insurance Company Ltd for more than ₹580 crore.
“We hereby inform you that IDBI Bank has entered a share purchase agreement with Ageas Insurance International NV (Buyer) on May 19, 2022 to sell IDBI Bank’s entire stake of 20,00,00,000 equity shares in Ageas Federal Life Insurance Company Ltd. (AFLI) pursuant to exercise of call option by Ageas,” IDBI Bank said in a regulatory filing.
The transaction would be concluded subject to regulatory approvals, the lender said.
As of March 31, 2022, LIC-controlled IDBI Bank holds 25% stake in the AFLI.
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 Bank is expected to receive up to ₹580.20 crore from sale of 25% stake in AFLI to Ageas, the bank added.
AFLI is a three-party joint-venture between IDBI Bank, Federal Bank and Ageas Insurance International NV, which is one of Europe’s largest insurance companies.
Ageas concentrates its activities in Europe and Asia, which together make up the major part of the global insurance market.
Private sector insurer AFLI posted a net profit of ₹94 crore in the fiscal ended March 2022, clocking profit for the 10th consecutive year beginning FY13.
With the stake buyout from IDBI Bank, AFLI will become the first company in the life insurance sector where the foreign partner will raise its stake to the maximum permissible limit of 74%.
Ageas raised its stake in the JV from 26% to 495 after buying 23% stake from IDBI Bank in December 2020. Federal Bank holds 26% in AFLI. The life insurance company began its operations in 2008 and reported its first profit in the first year of operations itself.
Stock of IDBI Bank traded at ₹36.65 apiece on BSE, up by 1.10% from previous close.