Six months after J&K Bank sold part stake in PNB MetLife India Insurance Company, the M Pallonji Group, the private insurer’s largest shareholder at the time of incorporation in 2001, is now looking to dilute its entire shareholding in the firm. The diversified conglomerate is exploring an exit and is looking to sell its 17.15 percent stake held by its flagship company M Pallonji & Company Pvt, sources told Moneycontrol.
Mehli Mistry and Pheroze Mistry are the promoters of M Pallonji group and cousins of former Tata Sons Chairman Cyrus Mistry.
“M Pallonji & Company entered the company 18 years back and is the oldest existing non-promoter shareholder along with J&K Bank. It is now keen on an exit due to its delayed IPO plans and uncertainty around the exact timing of its listing. The expected valuation for their stake is between Rs 2,000 crore and Rs 2,500 crore,” said a source.
Another source said private equity players, keen on the domestic life insurance segment, are likely to express interest in this proposed transaction.
In April, J&K Bank sold a 2.04 percent stake in PNB MetLife India Insurance to Oman India Fund for Rs 185 crore. It currently holds around three percent in the company. PNB MetLife India Insurance had filed its draft red herring prospectus (DRHP) for its initial public offering (IPO) with the Securities and Exchange Board of India (SEBI) in July 2018. It received nod from the markets regulator in November last year. Earlier this year, a Moneycontrol report dated March 6 said the IPO is likely to come out in Q2 FY20.
As of March 31, M Pallonji & Company, which offers industrial coating and painting services, had the highest shareholding in the non-promoter shareholder category. The parent group also has interests in shipping, automobile dealerships, dredging and finance.
Elpro International follows with 11.42 percent stake. The twin promoters Punjab National Bank and MetLife International Holdings held 30 percent and 32 percent stake, respectively.
In response to an email query from Moneycontrol, PNB MetLife said, “As a matter of company policy, we do not comment on shareholder holding.” The M Pallonji Group was unavailable for comment.
“Penetration of life insurance in India is still quite low compared to other countries, ensuring long-term growth of the life insurance industry in the country, making it an interesting private equity play. Also, some of the parent companies of these insurance players, mainly banks and NBFCs, are facing capital and NPA challenges and are keen to capitalise on their investments in insurance companies. Therefore, the environment is very suitable for such transactions,” said Rajeev Suneja, Partner (Financial Advisory), Deloitte India.
PNB MetLife India Insurance is one of the top 10 private life insurance companies in India. According to its 2018-19 annual report, total premiums increased by 20.83 percent, while new business premiums grew at 17.86 percent compared to an industry growth of 10.73 percent. Embedded value increased to Rs 3,898 crore as on March 31, representing an increase of 17.1 percent compared to the previous year.
The size of the Indian life insurance industry in FY18 stood at Rs 4.6 lakh crore on a total premium basis. In terms of total premium, the Indian life insurance industry is the 10th largest market in the world and the fifth largest in Asia, based on Swiss Re’s Sigma No 3/2018 report.
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