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finance | IST

PE firms line up for Oriental Bank of Commerce's stake in insurance JV

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Private equity firms such as Carlyle Group, GIC, TPG, Apax Partners, Baring PE Asia have expressed interest in acquiring Oriental Bank of Commerce's (OBC) stake in its life insurance joint venture.

Private equity firms such as Carlyle Group, GIC, TPG, Apax Partners, Baring PE Asia have expressed interest in acquiring Oriental Bank of Commerce's (OBC) stake in its life insurance joint venture, multiple sources familiar with the matter told CNBC-TV18 .
OBC plans to raise about Rs 1,500 crore via a 23 percent stake sale in Canara HSBC Oriental Life, which will value the insurance JV at about Rs 6,500 crore, said the above mentioned sources on the condition of anonymity.
The bank holds 23 percent in the company, while Canara Bank holds 51 percent and HSBC holds 26 percent stake.
OBC's divestment decision is due to the government’s Public Sector Bank Reforms Agenda. Further, Reserve Bank of India has issued a Prompt Corrective Action (PCA) framework to maintain a sound financial health of banks.
OBC had floated a tender document in November, inviting Expression of Interest (EoIs) to sell its entire 23 percent stake in Canara HSBC Oriental Life Insurance. The earlier deadline of December 3 to submit EoIs was extended by another three days following strong investor interest.
Existing shareholder HSBC has also expressed interest in ramping-up its share by acquiring OBC's stake in the JV. The deal, if materializes, would lift HSBC's stake in Canara HSBC Oriental Life Insurance to 49 percent.
Canara HSBC Oriental Bank Life is the only insurer that sells purely through bank branches. The life insurer posted a net loss of Rs 3.98 crore in Q2FY19 compared to a profit of Rs 22.62 crore in the year-ago period.
The Gurugram-based firm had assets under management of Rs 13,241 crore as of end-October.
 
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