India's second largest state-run bank, Punjab National Bank (PNB), has revived plans to list PNB MetLife Insurance, a move that could help the scam-hit bank raise capital.
“PNB MetLife has informed the insurance regulator about the initial public offering and plans to raise funds by selling a stake,” a person close to the development said. The company will file the papers soon with the regulator, reports The Economic Times.
PNB MetLife is a joint venture between Punjab National Bank (30%), Elpro (21%), M Pallonji & Company (18%), Jammu and Kashmir Bank (5%) and Metlife (26%). It has a share capital of INR21.28 billion ($314 million).
If PNB MetLife makes an IPO now, it will become the fourth life insurance company in India to list on the stock exchange.
PNB MetLife saw a 24% growth in new business income for the financial year ended 31 March 2018. Overall, life insurance companies in India grew by 11% in terms sales of new policies.
The insurer has a 2.4% share of the life insurance market. Its products are sold in 7,000 locations including the branches of Punjab National Bank. It is the second largest public sector-promoted life insurance company after State Bank of India's joint venture, SBI Life.
The IPO of PNB MetLife had been delayed due to PNB being hit by the Nirav Modi scam in February this year. PNB had bought its 30% stake in the insurance company in 2013 with a lock-in of five years. With that period now coming to an end, it can sell the stake.
Earlier this week, the Central Bureau of Investigation (CBI) filed charges against 27 people including jeweller Mehul Choksi as part of a probe into an alleged $2 billion fraud at PNB, considered the biggest fraud in India’s banking history and that took place between 2011 and 2017. PNB said in February that two jewellery groups led by jeweller Nirav Modi and his uncle Mehul Choksi had defrauded it by raising credit from overseas branches of other Indian banks using illegal guarantees issued by rogue PNB staff over several years. Those charged include Usha Ananthasubramanian, who was previously heading PNB, and two executive directors of the bank.