PNB bid to buy out Principal in 2 JVs
State-owned Punjab National Bank is in talks with US-based partner Principal Financial to buy out the latter’s stake in two of their joint ventures, PNB Principal Insurance Broking and Principal Financial Planning. But PNB has decided to continue a third JV, Principal PNB Asset Management Company.india Updated: Dec 07, 2009 22:52 IST
State-owned Punjab National Bank is in talks with US-based partner Principal Financial to buy out the latter’s stake in two of their joint ventures, PNB Principal Insurance Broking and Principal Financial Planning. But PNB has decided to continue a third JV, Principal PNB Asset Management Company.
“We will run the insurance broking and the financial planning company ourselves,” said a senior PNB official close to the development, who asked not to be identified. “The valuation of the two subsidiaries is less than Rs. 2 crore. We expect to finalise the discussion in a month’s time,” he added.
“Principal PNB AMC although is not doing as aggressively as other mutual fund companies, but it is doing fine and so we will not be exiting from this company,” he added.
PNB chairman and managing director K. R. Kamath did not respond to an e-mail from Hindustan Times on the matter, while Rajan Ghotgalkar, India head for Principal Financial Group (USA) said the matter was still under negotiation.
“No conclusion can be drawn at this stage,” he said.
Although Vijaya Bank is also a stakeholder in the companies, the PNB official said that it has not initiated any discussions on buying out Vijaya Bank’s stake, though that might be considered later.
In both the financial planning JV and the asset management company, PNB owns 30 per cent, Principal 65 per cent and Vijaya bank 5 per cent, while PNB holds 30 per cent, Principal 26 per cent, Vijaya Bank 19 per cent and Berger Pints 25 per cent in the insurance advisory.
Ghotgalkar said Principal was committed to India in the long term and “hopes to replicate its US retirement platform in India.”
“Although Principal Financial Group has no immediate plans of bringing in its banking and or its insurance business into India, however considering India’s potential nothing can be put aside when seen in the longer term context,” he said.
Meanwhile, PNB and Destimoney, which is the new name for financial services form DawnayDay, are set to announce on Wednesday a deal under which the US firm will buy 26 per cent in PNB Home Finance, which has been valued at more than Rs. 100 crore.