Shares of IDBI Bank rose nearly 5 per cent, hitting 52-week high on the Bombay Stock Exchange (BSE), after the lender said that its board has approved a plan to sell 27 per cent stake in its life insurance arm IDBI Federal Life Insurance for Rs 595 crore. In contrast, the BSE Sensex was trading 306 points, or 0.87 per cent, lower at 34,864. In the last one month, IDBI Bank shares have rallied as much as 106 per cent from the level of Rs 20.30 as on May 29, compared to 7.5 per cent rise in the BSE Sensex.
Shares of IDBI Bank gained as much as 4.89 per cent in opening deal to hit a record high of Rs 41.75 against previous closing price of Rs 39.80 on the BSE.
On the volume front, there was surge in trading as 25.01 lakh shares changed hands over the counter as compared to two-week average volume of 4.40 lakh shares.
On the National Stock Exchange (NSE), IDBI Bank share price was trading 3.63 per cent higher at Rs 41.45 against previous closing price of Rs 40. The stock opened higher at Rs 41.45 and touched a 52-week high of Rs 42 in intraday trade.
"The board of directors, at its meeting on June 26, 2020, has approved to sell IDBI Bank's stake in IDBI Federal Life Insurance Company to the extent of 23 per cent to Ageas and 4 per cent to Federal Bank at a combined value of about Rs 595 crore," IDBI Bank said in an exchange filing.
The stake sale is subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised, the bank said.
IDBI Federal Life Insurance, formerly known as IDBI Fortis Life Insurance, is a joint venture between IDBI Bank, Federal Bank and Ageas, an 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.
Post the stake sale, IDBI Bank's holding will come down to 21 per cent, while Ageas's stake in the insurance company will increase by 23 per cent to 49 per cent. Federal Bank's stake in IDBI Federal Life Insurance will increase by 4 per cent to 30 per cent.
IDBI Bank, which has been acquired by insurance giant Life Insurance Corporation (LIC), is planning to exit the insurance joint venture.
By Chitranjan Kumar