IDBI Bank has signed a share purchase agreement with Ageas Insurance International to sell its 25 per cent stake in Ageas Federal Life Insurance for ₹580.2 crore.
Post the stake sale, Ageas will own 74 per cent stake in private sector Ageas Federal Life Insurance. It will be the first foreign investor to use the enhanced foreign direct investment cap of 74 per cent for the insurance sector.
Deal may go through in Q2
“IDBI Bank has entered into a share purchase agreement with Ageas Insurance International NV on May 19, 2022, to sell its entire stake of 20,00,00,000 equity shares in Ageas Federal Life Insurance Company Limited (AFLI) pursuant to exercise of Call Option by Ageas,” the bank said in an exchange filing on Friday.
The transaction is expected to be completed in the second quarter of the current fiscal, subject to regulatory approvals and satisfaction of the terms and conditions set out in the SPA.
IDBI Bank will exit as a shareholder but remain a distribution partner, Ageas said in a statement. “This investment aligns with Ageas’ strategy to expand in regions in which it is already present and in promising markets with a low insurance penetration and high potential for growth such as the Indian life insurance market,” it further said.
Previously on March 29, the bank’s board had approved the proposal to sell its stake in the insurer. Ageas Federal Life Insurance is a joint venture with IDBI Bank, global insurance giant Ageas and Federal Bank.
Ageas had previously increased its stake in the insurer to 49 per cent from 26 per cent in December 2020. Federal Bank’s stake will continue at 26 per cent. Following this, the insurer’s name changed to Ageas Federal Life Insurance from IDBI Federal Life Insurance. Since becoming a subsidiary of Life Insurance Corpoation of India, IDBI Bank had been looking to pare its stake in Ageas Federal Life Insurance. It had stopped the distribution of policies of Ageas Federal Life Insurance.