Up to 12.5% of Bank of Baroda’s shareholding in IndiaFirst’s insurance subsidiary will be sold off

Through an offer for sale in the insurer’s initial public offering (IPO) or through another method, Bank of Baroda will sell up to a 12.5 percent interest in the insurance unit IndiaFirst Life Insurance Company.

Bank of Baroda will sell up to a 12.5 percent share in IndiaFirst Life Insurance Company’s insurance subsidiary through an offer for sale in the insurer’s initial public offering (IPO) or through another method. The Bank’s board of directors gave its approval to the sale of 12.5 percent of its shares in IndiaFirst Life during a meeting on Saturday.

The bank’s ownership of the life insurance subsidiary will not, however, decrease to less than 51%. The divestment, according to the bank, will happen through an offer for sale in IndiaFirst’s proposed initial public offering or by any other legal means, depending on market conditions, the Reserve Bank of India, the Insurance Regulatory and Development Authority (Irdai), and other regulatory bodies’ approval.

based in Mumbai, India First Life was a partnership between Union Bank of India, Bank of Baroda, and Carmel Point Investments India. An affiliate of the Bank of Baroda is the insurer. A 26 percent share in the insurer is held by Carmel Point Investments India, which is owned by private equity funds managed by Warburg Pincus LLC. The third key partner of the organisation is Union Bank of India (9 percent stake).

Following a “right of first offer” (ROFO) by Union Bank of India to the current shareholders of IndiaFirst Life, Bank of Baroda (BoB) purchased a 21 percent ownership in the insurance company in the preceding fiscal year (2021–2022). As a result, IndiaFirst Life is now a subsidiary of BoB.

BoB’s ownership of the business has increased from 44 to 65 percent. By absorbing Andhra Bank in April 2020, Union Bank gained a stake in IndiaFirst Life. IndiaFirst Life had a 2.4 percent private market share in FY22 and was the fastest-growing life insurer in terms of individual new business premium APE (Annual Premium Equivalent) revenue, expanding by 50% annually. It expanded at 3.2 times the rate of the entire life insurance market, including LIC.

In terms of individual new business APE among the private peers, it also raised its position from 12th to 11th from the previous year. As of March 31, 2022, the assets under management (AUM) was 18,932 crore.

Separately, BoB released its June quarter results on Saturday. Due to an increase in net interest revenue, the state-owned bank recorded a 79.3% increase in its standalone profit after tax (PAT) to $2,168 crore (NII).

Net interest income (NII) for the Bank of Baroda climbed by 12 percent to $8,838 million in Q1 2022 from $7,892 million in Q1 2021.

While the bank reported a 588 crore treasury loss for the quarter.

According to the investor presentation, Bank of Baroda recovered 1,740 crore in bad loans and upgraded 859 crore in loans. In FY2023, the lender has set a recovery goal of $13,000 billion.