Metlife to hike its stake in PNB Metlife to 47.32% in Rs 1,906 cr deal

Signs share purchase agreement with IGE (India) Pvt Ltd and Elpro International Ltd to acquire their combined holding of 15.27% in PNB MetLife India Insurance

Metlife International Holdings is looking to acquire the combined 15.27 per cent shareholding of IGE (India) Private Limited and Elpro International Limited in PNB Metlife India Insurance company for a cash consideration of Rs 1,906 crore, subject to regulatory approvals.

Upon the completion of this transaction, Metlife’s shareholding in PNM Metlife life insurance company will increase to 47.325 per cent, making it the largest shareholder in the private life insurer.  

In a statement, Metlife International Holdings said it has entered a share purchase agreement with IGE (India) Private Limited and Elpro International Limited to acquire their total combined shareholding of 15.27 per cent in PNB MetLife India Insurance Company.

The Dabriwala family, through their companies, IGE and Elpro, were one of the initial investors in PNB MetLife. The tentative date of completion of the transaction is November 3o, 2021.

Other shareholders of PNB Metlife include Punjab National Bank Limited (PNB), M. Pallonji and Company Private Limited, Jammu & Kashmir Bank Limited (JKB), and other private investors, with Metlife International Holdings and PNB being the majority shareholders. PNB holds 30 per cent in the life insurance company.

Kishore Ponnavolu, Regional President, Metlife Asia said, “MetLife’s joint-venture in India has all of the hallmarks we look for in deploying capital to create long term shareholder value: a track record of consistent execution, an extensive distribution network, strong growth, and an advantaged position in one of the world’s most attractive life insurance markets.

This marks the first foreign partner increasing its stake in a joint venture insurance company in India post the government allowing 74 per cent foreign direct investment in the Indian insurance sector. In this years union budget, the government raised the FDI cap to 74 per cent from 49 per cent earlier and allowed foreign ownership and control with safeguards.

Although the government had allowed FDI of up to 49 per cent in the insurance sector, as of March 2020, foreign investment in life insurance firms was only 37.41 per cent. Only in nine private life insurers, the foreign investment was 49 per cent.

Insurance experts had envisaged that by allowing foreign ownership and control, foreign partners, who were so far not interested in increasing their stake from 26 per cent, may look to buy off their Indian partners.

Also, this marks the second merger and acquisition activity in the life insurance sector in the past month after HDFC Life acquired a 100 per cent stake in Exide Industries-promoted Exide Life Insurance for Rs 6,687 crore, in a bid to enhance its proprietary channel.

In FY21, PNB Met Life earned a total premium of Rs 6,033 crore, with Rs 1,996 crore as new business premiums. And, it had a solvency ratio of 190 per cent, against the regulatory requirement of 150 per cent.