Private lender Federal Bank will buy additional 4 per cent stake in IDBI Federal Life Insurance Co Ltd (IFLIC) from the IDBI Bank, increasing the total shareholding in the life insurance joint venture to 30 per cent. In a filing to exchanges, the Kochi-headquartered bank said its board has approved a proposal to purchase additional stake of up to 4 per cent in the equity capital of IDBI Federal Life Insurance from IDBI Bank.
"The board of Federal Bank on 20 April 2020 has approved in principle to purchase additional stake of up to 4 per cent in the equity capital of IDBI Federal Life Insurance Co (IFLIC) from IDBI Bank," Federal Bank said in a filing to the Bombay Stock Exchange.
The proposed stake hike is subject to price finalisation and all relevant regulatory approvals from the Reserve Bank of India and the Insurance Regulatory and Development Authority of India (IRDAI). The indicative time period for completion of the acquisition is 6 months.
Currently, Federal Bank owns a 26 per cent stake in the insurance company.
The bank did not disclose the financial transaction involved in the deal. "Cost of acquisition or the price at which the shares are acquired is yet to be decided," it said in the regulatory filing.
IDBI Federal Life Insurance, formerly known as IDBI Fortis Life Insurance, is a joint venture between IDBI Bank, Federal Bank and Ageas, a European insurance company. The company was formed in 2008 with IDBI bank holding 48 per cent equity and Ageas and Federal Bank holding 26 per cent each.
IDBI Bank, which has been acquired by insurance giant Life Insurance Corporation (LIC), is planning to exit the insurance joint venture.
Shares of Federal Bank closed Tuesday's trade at Rs 43.4 apiece, down 5.75 per cent on the BSE, while the benchmark Sensex ended 3.2 per cent lower at 30,636.71.