Swiss Re, the world’s second largest reinsurance company, has expressed interest in buying Oriental Bank of Commerce's (OBC) entire stake in its life insurance joint venture, multiple sources familiar with the matter told CNBC-TV18 on Thursday.
The Zurich-based reinsurer has submitted its expression of interest (EoI) to acquire OBC’s 23 percent stake in Canara HSBC Oriental Life Insurance, which will value the insurance JV at about Rs 6,500 crore, said the above mentioned sources on the condition of anonymity.
CNBC-TV18 on December 7 reported that private equity players like Carlyle Group, GIC, TPG, Apax Partners and Baring PE had submitted their EoIs for the Canara HSBC Oriental Life Insurance stake.
ICICI Securities, the sole banker to the transaction, expects non-binding bids from interested buyers by the end of January and the transaction to conclude by end of current financial year, according to the sources.
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 state-owned lender expects to raise around Rs 1,500 crore via stake sale and the funds will likely help Oriental Bank come out of prompt corrective action (PCA). The banking regulator initiated PCA against the lender in October last year due to high non-performing assets.
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.
Canara HSBC Oriental Life Insurance, in an emailed response, said, "This is a shareholder matter. We cannot comment on market speculations." OBC and Swiss Re are yet to respond to CNBC-TV18’s request for comment.
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