ORIENTAL BANK IN TALKS TO SELL STAKE IN INSURANCE JV
MUMBAI: Oriental Bank of Commerce (OBC) said it has begun the process of selling its 23% stake in Canara HSBC OBC Life Insurance Ltd by hiring ICICI Securities as the manager to a potential sale. The public sector lender did not disclose the valuation of its stake. Two people aware of the development said, requesting anonymity, that OBC is looking to raise around ₹1,500 crore.
“OBC (the bank or the seller) holds 23% equity stake in the company (life insurance business) intends to disinvest its stake held in the company (proposed transaction). ICICI Securities Ltd (I-sec) has been appointed as the financial advisor for the proposed transaction by the seller,” the bank said in its tender document. OBC has sought expressions of interest from buyers by December 3. OBC did not respond to an emailed query on the valuation of the stake. A spokesperson for ICICI Securities declined to comment citing confidentiality.
Canara HSBC OBC Life Insurance is owned 51% by Canara Bank. HSBC Insurance (Asia-pacific) Holdings Ltd and OBC own stakes of 26% and 23%, respectively. “The bank is expected to raise around ₹1,400 crore-₹1,500 crore through the deal. The transaction is likely to close by last quarter of current fiscal year,” said the first person cited above. He said the proceeds will be used to boost the capital base of OBC.
In the September quarter, its common equity tier 1 (CET-1) rose to 7.18% from 6.50% a year earlier. Overall, the capital adequacy ratio (CAR) fell to 10.35% from 10.6% a year earlier. RBI has stipulated a minimum CAR of 9% for banks in India.