PremjiInvest, Temasek to buy stake in ICICI Prudential for $297M

ICICI Bank said on Monday its board has approved a plan to sell a 6 per cent stake in ICICI Prudential Life Insurance Company to PremjiInvest and Temasek for around Rs 1,950 crore ($297 million).

PremjiInvest, the private investment arm of Wipro chief Azim Premji, will buy a 4 per cent stake for Rs 1,300 crore ($197 million) in its single-biggest known bet on a company.

Temasek will pick a 2 per cent stake for Rs 650 crore (around $100 million) in what is turning out to be the busiest year for the Singapore state investment firm.

The proposed transaction values the life insurer at Rs 32,500 crore. Upon completion of the transaction, ICICI Bank will hold about 68 per cent of the firm while its strategic partner, Prudential Plc, will maintain its share of about 26 per cent.

ICICI Prudential is the largest private life insurer in the country, ahead of peers such as HDFC Standard Life. The overall life insurance industry is dominated by state behemoth Life Insurance Corporation, which accounts for about two-thirds of the premium collected in the six-month period ended September 30, 2015.

Interestingly, this is the second back-to-back transaction inked by ICICI Bank, the biggest private bank in the country by balance sheet size, in what seems like a move to monetise investments in its strategic businesses.

Last month, ICICI Bank said its board had approved the sale of a 9 per cent stake in ICICI Lombard General Insurance Company Ltd to existing partner Fairfax Financial Holdings Ltd, the Canadian investment firm founded by India-born Prem Watsa. The deal was worth Rs 1,550 crore ($237 million) and valued the insurer at Rs 17,225 crore ($2.6 billion).

ICICI Lombard is India's largest private-sector general insurer with gross written premiums of about $1 billion for the year ended March 31, 2015.

Fairfax will own 35 per cent after the deal while ICICI Bank will hold 64 per cent. The transaction is expected to close in the first quarter of 2016, subject to regulatory approvals.

Meanwhile, in an unrelated development, ICICI Bank said it plans to induct Vishakha Mulye, CEO and managing director of ICICI Venture, in its board.

For PremjiInvest, this adds to around half-a-dozen investments in India since January besides a few deals related to overseas tech startups.

Indeed, this is the second addition to its portfolio in which Temasek has co-invested. Last month, Temasek said it is picking up a stake in Policybazaar from Info Edge (India) Ltd. PremjiInvest had invested in the online insurance policy aggregator early this year.

The proposed transaction values the life insurer at Rs 32,500 crore

Temasek has invested or announced investments in more than a dozen firms in India this year, its busiest ever. This makes it the most active PE-style investor in the country in terms of number of transactions.

Deals galore in insurance

The insurance sector has been a hotbed of activity after the government allowed foreign companies to hold a 49 per cent stake in Indian insurers from 26 per cent earlier.

In September, Japan's Nippon said it would increase its stake in Reliance Life Insurance while Australian insurer QBE Group said it would buy more in Raheja QBE General Insurance Company Ltd.

Previously, UK insurer Aviva Plc said it was planning to increase its stake in Aviva India, its local JV with Dabur Group, to 49 per cent.

Japan's Tokyo Marine said it had sought to raise its holding in Edelweiss Tokio Life Insurance from 26 per cent to 49 per cent and Axa hiked its stake in Bharti Axa.

Also, Aegon raised its stake in Aegon Religare Life Insurance to 49 per cent as part of a larger deal where Religare sold its stake in the firm to media house and existing investor Bennett, Coleman & Co. Ltd.

Australia's Insurance Australia Group Ltd has also said it would increase its stake in a general insurance joint venture with India’s largest lender, State Bank of India, to 49 per cent.

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