Mumbai:

State run Bank of India(BoI) on Friday said, it plans to sell its 25.05 per cent stake in its decade old life insurance venture joint venture Star Union Dai-ichi Life Insurance(SUD).

 

In its request for proposal (RFP), the bank said  it is proposing to sell 6.48 crore equity shares which amounts to Rs 1,106 crore.While BoI has a 28.96 per cent stake in the life insurance joint venture, Union Bank of India and Dai-ichi Life has  25.10 per cent and 45.94 per cent, respectively.

 

Bank of India has invited non-binding proposal/bid for purchase of the said equity shares by April 12. The proposed stake sale is part of banks efforts to offload some of its non-core assets and raise funds. Shares of Bank of India on BSE ended the day at Rs 100.90 down by 0.10 per cent on Friday.

 

In its RFP bank stated that, “BOI is proposing to sell upto 6,48,739,64 equity shares having face value of Rs 10 each of Star Union Dai-ichi Life Insurance comprising 25.05 per cent of the total paid-up equity share capital of SUD Life with a floor price of Rs 170.50 per share.”

Established in February 2009, life's premium income of insurers stood at Rs 1,211 crore, while its profit after tax stood at Rs 55 crore in April-December 2018-19.

 

The insurer provides, individual and group plans that meet various needs which includes protection plans, savings plan, wealth plans, child plans and health plans among others and has negligible market share in the 24-player industry dominated by the national insurer LIC..
 

In June 2016, the bank sold an 18 percent stake in the life insurance arm to Dai-ichi Life for Rs 540 crore.

 

The money, as and when the stake sale happens, will help the bank, which is under the prompt corrective action framework of the Reserve Bank, to improve its capital position.

 

The bank had earlier planned to raise around Rs 800 crore by selling stake in some of its other non-core assets– STCI Finance and Sidbi. It holds 29.96 percent stake in STCI Finance, while it owns 2.84 percent in Sidbi.