ICICI Bank to sell 6% stake in Pru Life for Rs 1,950 crore

Premji Invest to pick 4%, Temasek arm Compassvale to get rest

ICICI Bank on Monday said it would sell a six per cent stake in its life insurance venture, ICICI Prudential Life Insurance, to Premji Invest and its affiliates, and Compassvale Investments Pte, a unit of Singapore-based Temasek, for Rs 1,950 crore. This deal values the life insurance company at Rs 32,500 crore, making it the highest valued private insurance company in the country.

Of the six per cent stake, four per cent will be sold to Premji Invest, while balance will be sold to Compassvale Investments, an indirectly wholly-owned subsidiary of Temasek.

Recently, Standard Life had said it would buy nine per cent additional stake in its Indian insurance venture, HDFC Life, taking its stake to 35 per cent from 26 per cent at present. This deal had valued HDFC Life at Rs 18,951.4 crore.

HDFC Life, which is the third largest private life insurer after ICICI Prudential Life and SBI Life (based on new premiums), collected Rs 3,039.40 crore for the April to October period, according to data from the Life Insurance Council, showing a growth of 25 per cent. It had posted net profit of Rs 186.5 crore for quarter ended September 30, 2015, against Rs 173.5 crore posted in the corresponding quarter of the previous financial year.

"The proposed transaction values the company at Rs 32,500 crore, reflecting the substantial value created by the business since its inception," ICICI Bank said in a release. Its board of directors have given approval to this transaction, which now needs government and regulatory approvals.

After completion of the deal, the bank will hold 68 per cent stake in the insurance venture. Its joint venture partner, UK-based Prudential Plc, will continue to hold 26 per cent stake. The new insurance Act allows foreign insurers to hold up to 49 per cent stake in an Indian insurance company.

According to data from the Life Insurance Council, ICICI Prudential Life Insurance collected new premiums of Rs 3,816.63 crore for the April to October period, seeing a 46 per cent growth from the corresponding period in the last financial year. A large portion of sales comes from the unit-linked insurance plan (Ulip) product, while the rest is from the traditional product portfolio.

Its profit for the quarter ended September 30, 2015, rose to Rs 415 crore from Rs 399.2 crore posted in the corresponding quarter of the of last fiscal. The insurer was among the first private insurers to be granted a licence after the industry was opened up in 2000.

ICICI Bank had also recently announced sale of stake in its general insurance venture, ICICI Lombard. In October, it said Prem Watsa-founded Fairfax Financial Holdings will increase its stake in ICICI Lombard General Insurance to 35 per cent approximately, from 25.7 per cent held currently. This deal had valued the company at Rs 17,225 crore.