Punjab National Bank
(PNB) on Thursday said it has decided to pick up 30 per cent stake in Metlife India Insurance Company at an undisclosed sum, a move that marks entry of the state-run lender into the insurance sector.
"The board has approved and accepted the offer made by Metlife India
to acquire 30 per cent stake in the insurance company and the transaction is subject to all regulatory approval," PNB Chairman and Managing Director K R Kamath said.
He said, "Thirty per cent stake to PNB will come from fresh issue of shares. This will dilute the existing percentage of shareholders proportionately".
Metlife of the USA will do have an arrangement with existing shareholders and will increase its stake to 26 per cent within 120 days of operationalisation of the deal, he said.
Following the closing of the transaction, the company will be rebrand itself as PNB Metlife, he added.
Currently, Metlife India stakeholders, include Jammu and Kashmir Bank, Shapoorji Pallonji and other investors, besides Metlife of the US. The paid up capital of the insurer was Rs 1,993 crore at the end of March, 2011.
Asked about the deal size, Kamath said, "Commercial terms of transaction have been kept confidential".
Commenting on the deal with PNB, Metlife India Managing Director Rajesh Relan said the partnership would help the company grow into a top-tier life insurer and more than double its market share.
"The partnership with MetLife will provide PNB insurance expertise and bancassurance capabilities that will be an asset to the bank as it pursues its growth strategy in India and seeks to expand its leadership in the Indian financial services market," he said.
Metlife President International President William J Toppeta said: "India is very important country for our company".
It is to be noted that PNB last year decided to part ways with its foreign partner Principal Financial Group in a proposed life insurance joint venture it set up four years ago.
PNB bought the entire 26 per cent stake held by Principal Financial Group and the 32 per cent participating interest of domestic firm UK (Berger) Paints in Principal PNB Life Insurance Company Ltd.
PNB's stake in the proposed joint venture was 30 per cent, while that of Vijaya Bank was 12 per cent.