Punjab National Bank (PNB) plans to acquire a 30 per cent stake in MetLife India Insurance Company, making it the largest shareholder in the joint venture life insurer operating in India for the last 10 years.
The deal, for an undisclosed amount and subject to regulatory approvals, will reduce the stake of MetLife International Holdings (the No. 1 life insurer in the US) from 26 per cent to 18-19 per cent.
PNB's 30 per cent acquisition will involve issuance of fresh shares by MetLife India. The American partner will “work out arrangements” with existing shareholders to restore its stake in the joint venture to 26 per cent, Mr K. R. Kamath, Chairman and Managing Director, PNB, told presspersons here on Thursday. This will happen within 120 days of the deal getting operationalised.
MetLife India's Rs 1,993-crore equity capital is currently held by Jammu & Kashmir Bank, M. Pallonji & Co Pvt Ltd and other private Indian investors, who together control 74 per cent. Mr William J Toppeta, President-International, MetLife Inc, who was present when the deal was announced, made it clear that the US insurance major's equity dilution was temporary and “we will execute to increase our share back upto 26 per cent, which is the maximum permitted under Indian law”.
Once the transaction is completed, MetLife India will be renamed PNB MetLife to leverage both brands, Mr Kamath said. On whether PNB would pay a premium for its 30 per cent acquisition, he added that “the details are kept confidential because regulatory approvals have to be received and Metlife India is not a listed company”.
For the year ended March 31, 2011, MetLife India registered a net profit of Rs 35.35 crore on a total revenue of Rs 2,615.13 crore. The venture reported a net loss of Rs 274.82 crore on a total revenue of Rs 2,627.63 crore the previous year.
PNB had initiated the process for selecting a life insurance partner in December 2010. Before that it had entered into a tie-up with another US-based insurer Principal which did not take off.