PNB picks up stake of its foreign partner in life venture
Punjab National Bank will buy out the 58 per cent stake held by two of its partners in a proposed life insurance joint venture, which is still awaiting regulatory approval.business Updated: Jun 23, 2010 22:37 IST
Punjab National Bank will buy out the 58 per cent stake held by two of its partners in a proposed life insurance joint venture, which is still awaiting regulatory approval.
PNB holds a 30 per cent stake in the proposed life insurance venture, called Principal PNB Life Insurance Company, in partnership with Mauritius-based Principal Financial Group (26 per cent stake), domestic firm UK Paints (32 per cent) and Vijaya Bank (12 per cent).
The company never got regulatory approval from IRDA due to differences between the partners.
PNB will buy the entire 26 per cent stake held by Mauritius-based Principal Financial Group in the life insurance company, as well as domestic firm UK Paints' 32 per cent participating interest, the bank informed the Bombay Stock Exchange.
However, the other local partner Vijaya Bank would remain with the joint venture.
Following the change in partnership, the name of the proposed joint venture would also be changed, sources said.
Post regulatory approval, the stake of PNB in the venture would go up to about 88 per cent.
The stake sale was formalised under a Memorandum of Understanding inked between the JV partners for restructuring their existing joint ventures.
PNB and Vijaya Bank will decide on the future course of action in the insurance company after getting regulatory approvals and finalisation of the deals, it said.
At the same time, the Delhi-based public sector lender will also buy out Principal and Berger Paints stake of 26 per cent and 25 per cent respectively in a proposed insurance broking company, which also did not get off the ground.
However, in the asset management joint venture with Principal, both PNB and Vijaya Bank will remain as partners for a period of three years.
As part of the joint venture restructuring, it was also decided that PNB and Vijaya Bank will sell their 30 per cent and 5 per cent stake respectively in a proposed joint venture distribution firm to Principal.