Public sector lender Bank of India (BoI) has sold 18 per cent stake in Star Union Dai-ichi Life Insurance to Japanese partner Dai-lchi Life Insurance.
While the company did not disclose the financial details of the deal, sources said the value of the 18 per cent stake was Rs 540 crore, valuing the insurance company at Rs 3,000 crore.
Star Union Dai-ichi Life Insurance is a joint venture (JV) between BoI, Union Bank and Dai-ichi Life Insurance. Following the transaction, Dai-ichi Life will now hold 44 per cent in the company.
BoI’s stake in insurance JV will be down to 30 per cent, from 48 per cent. The transaction is subject to regulatory and statutory approvals, including that from the Reserve Bank of India.
Earlier, foreign direct investment (FDI) in the insurance sector was restricted to 26 per cent.
After the Insurance Laws (Amendment) Act was passed in 2015, the FDI limit was increased to 49 per cent.
Now, the government has allowed up to 49 per cent FDI in the sector through automatic route.
BoI on Tuesday told the BSE that upon change in law, it sold its 18 per cent stake in the insurance company.
Union Bank of India, other JV partner, would continue to hold 26 per cent stake in the company.
The company reported its maiden profit of about Rs 13 crore in FY15, in its sixth full year of operations.
According to the Insurance Regulatory and Development Authority of India, Star Union Dai-ichi Life had a four per cent growth in new premiums for FY16, as against FY15.
The insurer collected first year premiums of nearly Rs 654 crore in FY16, compared with about Rs 630 crore collected in FY15.