CNBC-TV18 has learnt that MetLife is looking at raising its stake in PNB MetLife all the way to 74 percent.
As far as the insurance sector is concerned, they were very keenly looking forward to that foreign direct investment (FDI) raise, which the government allowed as a part of their previous Union Budget. After that, of course, a lot of companies were exploring ways in which they could raise their stake to whatever extent, the latest is MetLife, which is a foreign insurance partner, in PNB MetLife.
MetLife has met the insurance regulator to discuss the proposal of raising its stake in PNB MetLife, all the way till the FDI limit of 74 percent.
As far as the current shareholding is concerned, PNB owns about 30 percent stake in PNB MetLife and MetLife owns about 32.05 percent stake in PNB MetLife, which means that MetLife is looking at acquiring about 42 percent additional stake to take its stake all the way to 74 percent.
It is also understood that from the discussion which MetLife has had with the insurance regulator, the company wants to increase this take in two tranches or two ways simultaneously. One would be fresh issuance of equity, which would be done from the company side to MetLife letting them increase their stake and the second one would be buying out a minority shareholders stake in PNB MetLife.
Companies like Elpro International and M Pallonji Group also own a significant amount of stake when it comes to PNB MetLife, which MetLife would look to acquire and the conversations for that have already begun.
There would be two ways in which MetLife would look to increase the stake - the second part is more interesting where MetLife could look at acquiring the stake from the minority shareholders of PNB MetLife.
Elpro International and M Pallonji Group are looking to divest their stake in PNB MetLife simply because both these companies have nothing to do with businesses of insurance and financial services. So Elpro’s stake in the company is at about 11.42 percent and if one looks at PNB MetLife, the valuation could be around Rs 11,000 to 12,000 crore.
With that, if Elpro International divests its stake, the company would be able to raise about Rs 1,250 to 1,300 crore.
What is interesting for Elpro International is that the company's market cap is about Rs 970,000 crore and the value of its stake in PNB MetLife goes all the way till Rs 1,250 to 1,300 crore.
Other than that, M Pallonji Group could also look at selling the stake and their stake in PNB MetLife could be valued around Rs 790 to 800 crore.
Watch the accompanying video of CNBC-TV18’s Yash Jain for more details.
(Edited by : Dipika Ghosh)