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Last Updated : May 11, 2018 08:30 PM IST | Source:

IDBI Federal Life stake sale by August; foreign partner Ageas has first right to bid

Both IDBI Bank and Federal Bank are looking to exit the life insurance venture.

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Beena Parmar @BeenaParmar
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The stake sale in IDBI Federal Life Insurance is likely to be completed by August, but there is a caveat. The insurance company's foreign partner Ageas has the first right to offer a counter-bid.

Max Life Insurance is said to be leading the race to bid for the life insurer. Others include Kotak Life and Aditya Birla Sun Life Insurance.

“We do not comment on rumours and speculation”, said Rohit Rao, Spokesperson, Kotak Mahindra Group.

E-mails sent to Max Life and Aditya Birla Sun Life by Moneycontrol did not evince responses.

IDBI Federal Life is a joint venture between IDBI Bank and Federal Bank, with Belgium-based Ageas SA/NV as the foreign partner.

While IDBI Bank holds a 48 percent stake in the venture, Federal Bank and Belgian life insurer Ageas hold 26 percent each.

While both the Indian partners want to sell their stakes, IDBI has already put its stake on the block. Federal Bank, on the other hand, is waiting to review the offers before taking a final call.

Three sources told Monecontrol that IDBI Federal Life could be valued at around Rs 7,000-7,500 crore. Considering this, IDBI Bank stands to make around Rs 3,400 crore if the stake sale goes through.

The sources also said that Ageas is yet to arrive at a decision on whether or not to bid for the stake on sale. Only if it refuses can one of the other offers be selected, according to the initial terms of the life insurer's shareholding agreement.

Ageas and IDBI Federal Life did not immediately reply to an e-mail sent to them, seeking clarification on this issue. The story will be updated if they respond.

Shyam Srinivasan, Managing Director and Chief Executive Officer, Federal Bank said that the stake sale is in the very last stages and that negotiations are on between the final bidders.

"By July or August, the full process will be consummated. We are waiting for the right price to arrive and decide on taking a call," he said.

On being asked if Federal Bank would sell its entire stake, Srinivasan said, "As per the agreement, the foreign partner has the right to make a counter offer to buy the holding and only then the final decision will be taken. So we are waiting for the final price to arrive..."

The initial plan was to complete the stake sale by the end of the June quarter. However, the process could take more time as negotiations on the pricing are currently underway.
First Published on May 11, 2018 11:07 am
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