Punjab National Bank (PNB), the country’s second-largest state-run lender, on Thursday said it would buy 30 per cent stake in private life insurance company Metlife India to mark its foray into the life insurance segment. The two would form a joint venture called PNB MetLife India Ltd.
“With 60 per cent branches in rural and semi-urban areas, PNB is uniquely positioned to take insurance to the deep pockets of India. This partnership has the potential to drive the company into the top tier of Indian life insurers, and more than double its market share,” said PNB Chairman and Managing Director K R Kamath.
MetLife India, an affiliate of MetLife, US, was incorporated as a joint venture between MetLife International Holdings, The Jammu and Kashmir Bank, M Pallonji, Co Private Limited and other private investors.
Kamath said the fresh 30 per cent stake would come from a fresh issue of shares, which would dilute the existing percentage of shareholders proportionately. Metlife would have an arrangement with existing shareholders and increase its stake to 26 per cent within 120 days of operationalisation of the deal.
William J Toppeta, president International, of MetLife, said, “Given its global significance, India is a strategic focus market for MetLife. We believe that the addition of an outstanding financial institution like PNB as a shareholder and partner will greatly enhance MetLife India's ability to move into the top tier life companies here.”
The transaction is subject to approvals from of the Insurance Regulatory and Development Authority, the Reserve Bank of India and other regulatory bodies.
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PNB started the process of acquiring stake in Metlife in December 2010, when it invited expression of interest from insurance companies across the world. The bank received responses from 26 Indian and international companies proposing different models. After evaluating the different models, it opted to acquire stake in an existing Indian life insurance company.
Earlier this year, 'requests for proposal' were issued to 10 Indian insurance companies.