New Delhi, Jun 27 (PTI) IDBI Bank on Saturday said its board has approved the sale of more than half of the bank's 48 per cent stake in IDBI Federal Life Insurance Co Ltd (IFLI) to current joint venture partners for Rs 595 crore.

In a regulatory filing, IDBI Bank said it will sell 23 per cent stake to Ageas Insurance International N.V and 4 per cent to Federal Bank.

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After the deal, the Belgian insurer Ageas stake in IFLI will increase to 49 per cent, while Federal Bank's stake would go up to 30 per cent. Post stake sale, IDBI Bank will have 21 per cent stake in IFLI.

"The board of directors, at its meeting held on Friday, June 26, 2020, has approved to sell IDBI bank's stake in IDBI Federal Life Insurance Company Limited (IFLI) to the extent of 23 per cent to Ageas and 4 per cent to Federal Bank at a combined value of about Rs 595 crore, subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised," it said.

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The Rs 595 crore raised through this transaction values the life insurer at around Rs 2,200 crore which is just a slight premium to the company's book value.

Post Life Insurance Corporation India (LIC) acquiring 51 per cent stake in IDBI Bank, the stake sale had become imperative as insurance laws do not allow an insurance company to own a significant stake in a rival insurer.

An insurer is not allowed to hold more than 10 per cent stake in a rival insurer. Since LIC owns 51 per cent stake in IDBI Bank and the latter owns 48 per cent stake in IDBI Federal Life Insurance Company, the bank has to divest its stake in its insurance joint venture.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)