India: Life insurer LIC to pare IDBI Bank holding in tranches

Life Insurance Corporation of India (LIC) is planning a gradual sale of its stake in IDBI Bank, three people aware of the matter said, nearly two years after it rescued the lender at the Centre’s instance.

In January 2019, India’s largest insurer bought 44% stake in IDBI Bank for 21,624 crore, saving it from collapse. After the stake purchase, LIC holds 51% in the bank.

LIC and government officials are discussing the stake sale plan, the people mentioned above said on condition of anonymity.

IDBI Bank has secured shareholder approval to raise up to 11,000 crore this fiscal in two tranches via equity sales, while LIC is looking for the bank’s stock price to improve before selling its stake.

The Insurance Regulatory and Development Authority of India (Irdai) restricts insurer’s holding at 15% stake in a single firm to mitigate concentration risk. Irdai also does not allow an insurer to have ownership in any non-insurance company. The Reserve Bank of India does not allow non-banking entities to have more than 10% stake in a bank. The government’s main aim of bringing in LIC is fulfilled and regulators now want LIC to bring down its stake in IDBI Bank in line with existing regulations.

IDBI Bank, like other lenders, aims to raise money to strengthen its capital buffers after the blow from the lockdown to check the spread of coronavirus. It plans to first raise 6,000 crore in a qualified institutional placement (QIP). After assessing the impact of the loan moratorium, the bank may raise another 5,000 crore after the December quarter.

This article was first published on livemint.com.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.