PNB may pick up 26% stake in MetLife India

There is more consolidation in the life insurance space. Punjab National Bank seems to be closing in on Metlife India Insurance company and the deal could be announced by the end of the second quarter.

This deal would not just be an investment but a useful tie up for bancassurance, one of the widest forms of selling insurance. PNB could pick up 26 per cent stake in Metlife.

J&K Bank is looking to offload its stake in MetLife India and some PE investors are also looking to exit the business. The 26 per cent stake in Metlife is valued between Rs. 600 crore – Rs.700 crore. NDTV has learnt that PNB may raise its stake to 51 per cent at a nominal value.

Metlife India Insurance is promoted by J&K Bank, which has 25 per cent stake. The M Pallonji Group has 10 per cent equity while a clutch of private equity investors hold another 39 per cent stake. Metlife International Holdings has 26 per cent stake, the ceiling permitted by policy.

A little under half of Metlife India's revenues have traditionally come from banassurance – insurance products sold through the bank. Last year, Axis Bank called off its deal with Metlife and tied with Max New York Life, hitting Metlife's annual premium income. That could now change. When NDTV contacted PNB Chairman, he said: that the due diligence was being carried out but no final decision had been taken.

“Due diligence on the deal is going on but nothing is finalised as yet," said K R Kamath, CMD of Punjab National Bank.

After ADA 's deal with Nippon, Bharti Axa and Mukesh Ambani's RIL, Ajay Piramal potentially buying into ING Vysya, this could be the fourth deal announced in the last six months.

With so many players in insurance, competition is tough and margins are wafer thin but given that insurance penetration is under 10 per cent in India, and valuations in other countries are sky high.. its a sector that is seeing action like never before.