IndusInd Bank to pick up 3-5% stake in Aviva Life

Private sector lender IndusInd Bank is set to pick up three-five per cent stake in private sector life insurer Aviva Life Insurance. According to sources privy to the development, as part of the deal, apart from offering shares, Aviva Life would also pay an advance commission, taking the total valuation of the deal to around Rs 1,000 crore.

“The final modalities are being worked out. IndusInd Bank would have a board meeting later this week, after which the deal would be announced,” a source said.

The private sector lender is already a corporate agent for Aviva Life, a joint venture between fast-moving consumer goods major Dabur Group and UK’s Aviva, with the latter holding 26 per cent stake.

Earlier this year, Axis Bank had picked up a stake of four per cent in Max New York Life, in a deal valued at around Rs 75 crore. According to recent reports, Syndicate Bank is expected to pick up six per cent stake in Birla Sun Life Insurance Company. As a part of the deal, Birla Sun Life has offered to pay Rs 600 crore as advance commission to the public sector lender.

The Dabur Group has been looking to dilute a part of its holding in Aviva Life Insurance. The insurer was also among the three companies short-listed by Punjab National Bank for its insurance joint venture. However, in July, the Delhi-based bank entered into an agreement with Metlife to buy 30 per cent stake in Metlife India.

Aviva Life was also in talks with public sector lender Syndicate Bank, which had floated a request for proposal for a joint venture in the life insurance segment in April.

Aviva Life started its operations in 2002 and promoters of the company had infused Rs 2,004 crore till March 2011. The company had declared a profit of Rs 29 crore in 2010-11. During the April-December period of the current financial year, Aviva Life collected premiums worth Rs 466.14 crore through new policies, a marginal fall compared with Rs 469.30 crore collected in the corresponding period a year ago.

Under the bancassurance model, banks offer their branch networks as low-cost distribution channels to insurance companies. Last month, the Insurance Regulatory and Development Authority (Irda) brought out draft guidelines on bancassurance. These advocated opening up of the bancassurance channel and accordingly, Irda had divided the country into three zones

Source: Business Standard