LIC: LIC keen to keep part of its stake in IDBI Bank to reap benefit of bancassurance

State-owned LIC, promoter of IDBI Financial institution, has stated it plans to retain part of its stake within the lender to harness the advantages of the bancassurance. Together with the federal government, Life Insurance coverage Company (LIC) can even divest its stake in IDBI Financial institution however might not exit fully, LIC Chairman Siddhartha Mohanty advised PTI in an interview.

“We’ve made it clear that IDBI Financial institution is our primary companion in bancassurance. We’ll retain the some stake in IDBI Financial institution in order that the bancassurance partnership continues,” he stated.

The federal government, which owns over 45 per cent stake in IDBI Financial institution, and life insurance coverage behemoth LIC, with a 49.24 per cent shareholding within the lender, have collectively determined to promote a 60.7 per cent stake.

IDBI Financial institution grew to become a subsidiary of LIC with impact from January 21, 2019, after the acquisition of an extra 82,75,90,885 fairness shares.

On December 19, 2020, IDBI Financial institution was reclassified as an affiliate firm because of the discount of LIC shareholding to 49.24 per cent, following the issuance of extra fairness shares by the financial institution beneath a professional institutional placement (QIP).

IDBI Financial institution has been the strongest contributor to the bancassurance channel, he stated, including for the bancassurance association to proceed, LIC might not be required to carry your entire stake. Bancassurance is an association between a financial institution and an insurance coverage firm, permitting the latter to promote its merchandise to the financial institution’s clients and others by way of the department community. Earlier this month, Division of Funding and Public Asset Monetisation (DIPAM) Secretary Tuhin Kanta Pandey stated the stake sale in IDBI Financial institution might not be accomplished by March 2024.

The transaction is “on target”, however there are elements just like the RBI’s match and correct standards, which must be complied with, Pandey stated, including, “We virtually do not suppose that earlier than March, we will conclude it (IDBI Financial institution stake sale)”.

Concerning the issues of shareholders on the low worth of LIC shares post-listing, Mohanty stated, “We’re very a lot involved in regards to the curiosity of our shareholders and taking steps to create margin by adopting numerous means, together with by altering product combine”.

Publish itemizing, there was a directional change in LIC’s strategy with regard to product combine, channel combine and digital intervention, he famous.

Share motion is a operate of many issues, he stated, including that “as administration, we’re dedicated to create shareholders worth, and in that course, we’re working”.

To instil confidence amongst overseas traders, LIC had carried out a non-deal roadshow within the US, UK, Singapore and Hong Kong earlier this yr.

The non-deal roadshow received a very good response, and most traders evinced lots of curiosity in LIC, Mohanty stated.

He expressed hope that FIIs can even take curiosity as a result of they’re observing quarterly efficiency. As soon as they’re satisfied, cash will move.