The sale of IDBI Bank's stake in IDBI Federal Life Insurance could be scrapped following LIC's involvement with the bank as a major financial investor.
People close to the development said that most bidders had already pulled out except for Aditya Birla Capital, and that LIC’s imminent investment in the ailing lender may prompt the process to be officially called off, reports The Economic Times.
“With LIC being a prominent shareholder, no insurance company will come close to buying IDBI Federal Life Insurance,” said a source close to the development.
Last Friday, the IRDAI allowed LIC to buy a stake of up to 51% in IDBI Bank in which the state owned life insurer already owns a 10.82% stake. LIC will also become a significant owner of private sector insurer IDBI Federal Life Insurance, in which IDBI Bank owns 48%, and the rest is split between Federal Bank and Ageas.
Bidders such as Kotak Life and Birla Sun Life were keen on IDBI Federal Life as it could have given them access to IDBI Bank’s extensive branch network. But now insurers may have second thoughts due to the presence of LIC, a key rival and the country’s largest life insurer.