Jammu & Kashmir (J&K) Bank is exploring possibilities to sell its entire five per cent stake in PNB MetLife India Insurance Company for about Rs 700 crore, people familiar with the development told Business Standard.
The insurance company is a joint venture among the US-based MetLife International Holdings, Punjab National Bank (PNB), J&K Bank,
M Pallonji and Company, and other private investors. MetLife International and PNB are majority shareholders in the company, with 26 per cent and 30 per cent stake, respectively.
Sources said majority shareholders will have the first “right to refusal” in buying J&K Bank’s stake in the company. In case they were not willing, the bank will search for a buyer outside the company. “The bank is in the process of selling its entire stake in PNB MetLife. The process has already started. While the pricing has not been finalised yet, the bank expects to get close to Rs 700 crore for its five per cent stake,” a source said.
PNB MetLife was earlier known as MetLife India Insurance Company. It was renamed after PNB acquired stake in the company from its existing shareholders.
J&K Bank had trimmed its stake in the company from 11.26 per cent to five per cent when it sold some of its shares to MetLife. The bank had raised around Rs 190 crore by selling 52 million shares at Rs 36.50 per share.
J&K Bank and PNB MetLife refused to comment on the development.
Interestingly, J&K Bank is also the bancassurance partner of PNB MetLife. “The bancassurance tie-up will continue and will not be impacted because of J&K Bank’s stake sale in PNB MetLife,” said a source.
Sources claimed J&K Bank’s decision to sell its stake in the insurance joint venture was due to strategic reasons and not because of capital crunch or asset quality stress in its banking business.
“The bank is adequately capitalised. There is no issue on that front,” one of the people quoted above said.
PNB MetLife reported net profit of Rs 192 crore in FY14 against Rs 108 crore in FY13. It collected Rs 672.6 crore new premiums for FY14, compared with Rs 840 crore in FY13, according to Irda data.