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Jammu and Kashmir Bank (J&K Bank) wants a hefty premium for selling its entire five per cent stake in PNB MetLife India Insurance Company. The lender was earlier exploring opportunities to sell its shares in the insurance joint venture for about Rs 700 crore.
“The old valuation is no longer valid. The price has to be much, much higher for us to sell our stake. We have started the process (of identifying buyers). But we are not going to do it in a hurry. We are not desperate to sell our stake,” Mushtaq Ahmad, chairman and CEO of J&K Bank, told Business Standard.
The insurance company is a joint venture between US-based MetLife International Holdings, Punjab National Bank (PNB), J&K Bank, M Pallonji and Company, and other investors. PNB and MetLife International own maximum shares in the company with 30 per cent and 26 per cent stake, respectively.
Ahmad did not offer details on the price at which the bank was willing to sell its shares in the insurance venture. “We will wait for the right price,” he said, adding that a higher valuation was justified as the company’s performance has improved.
For the quarter ended June 30, 2014, PNB MetLife had collected new business premiums of Rs 137.07 crore, compared to Rs 134.20 crore in the corresponding period of the previous year. The insurance company reported a net profit of Rs 192 crore in 2013-14 (April-March), compared to Rs 108 crore a year earlier.
PNB MetLife was earlier known as MetLife India Insurance Company. It was renamed after PNB acquired a stake in the insurance venture 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 then raised Rs 190 crore by selling 52 million shares at Rs 36.50 a piece.
It was not immediately known if PNB was willing to increase its stake in the company further by buying J&K Bank’s remaining five per cent stake. MetLife International will not be allowed to buy these shares as current rules prevent foreign insurers from owning more than 26 per cent stake in insurance ventures in India.
Also, J&K Bank along with PNB and Karnataka Bank are bancassurance partners of PNB MetLife. The three lenders market the insurer’s products through their bank branches.
PNB MetLife maintained that even if J&K Bank sells its stake in the company, it would not affect its bancassurance partnership. “In view of the current calamity in Jammu and Kashmir, we are setting up claim camps to ensure all J&K Bank customers who had a PNB MetLife policy get easy access to claim settlement. Any decision on stake sale is a board call and does not impact our bancassurance arrangement,” said Tarun Chugh, managing director and CEO of PNB MetLife.
