Kotak Mahindra Bank (KMB) declared today (April 28) that it is purchasing out British partner Old Mutual’s entire 26 per cent stake in its life insurance arm for Rs 1,292.7 crore.
In a statement, the bank said, “In line with its philosophy to deepen and expand in Indian financial services, KMB has entered into an agreement to purchase the entire 26 per cent equity stake held by Old Mutual in Kotak Mahindra Old Mutual Life Insurance for a consideration of Rs 1,292.7 crore.”
It also said, the buyout is subject to regulatory and other approvals, and will result in the Kotak Mahindra Group holding 100 per cent equity in Kotak Life.
Kotak has started the life insurance joint venture with the British partner, owning seventy four percent of shares. With the passage of time, there has been liberalization in overseas holding caps in the insurance sector to 49 per cent and many foreign entities have improved their holdings.
KMB’s president for asset management, insurance and international business Gaurang Shah said the two partners have had a “fruitful relationship” over the past 16 years.
“India is in an exciting phase of its economic journey and the financial services sector, especially the insurance sector, is poised for significant growth. Kotak Life will continue to leverage this opportunity,” he said.
The statement comes within a month of the bank publicizing a plan to rise up to Rs 5,000 crore through a share sale, amid series of speculations that it may be in the market looking for acquisition opportunities in the banking space.
KMB’s executive vice chairman and managing director Uday Kotak had confirmed their concern in inorganic growth opportunities and said that they will also look to install the capital in the stressed assets management space.