India’s largest state-owned
bank, Punjab National Bank (PNB), has finally found a suitable
partner in MetLife India. Subject to regulatory approval, PNB will
acquire a 30% stake in MetLife India for an undisclosed sum and
establish a joint venture in India’s life insurance
market.
PNB signalled its intention
to find a suitable partner in December 2010 by inviting local and
international companies to submit expressions of interest in
partnering with it.
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PNB said in a statement it
received responses from 26 Indian and international companies
proposing different models. After evaluating the various models,
the bank opted to participate in a brownfield venture by acquiring
a stake in an existing Indian life insurance company.
Following this, requests for
proposals were issued to 10 Indian insurance companies that had
proposed the brownfield model.
PNB noted that, based on
technical evaluations, it shortlisted three life insurance
companies and, following consideration of their bids, accepted
MetLife India’s offer.
MetLife international
president William J Toppeta said: “We believe that the addition of
an outstanding financial institution like PNB as a shareholder and
partner will greatly enhance MetLife India’s ability to move into
the top tier of life companies here.”
PNB, which ranks as India’s
second-largest bank, will distribute MetLife India’s products to
its 60m customers on an exclusive basis through its 5,290 branches,
60% of which are in rural and semi-urban areas.
Following closure of the deal
it is intended to change the insurer’s name to PNB
MetLife.
PNB chairman and managing
director KR Kamath said: “This partnership has the potential to
drive the company into the top tier of Indian life insurers and
more than double its market share.”
MetLife India was established
in 2001 as a joint venture between MetLife and The Jammu and
Kashmir Bank and a number of private partners and currently
distributes its products through 30,000 tied agents and 600
branches of its bank partners.
In its financial year to 31 March 2011 MetLife India
reported a net profit of INR353.5m ($7.6m) on unchanged revenue of
INR2.75bn. This was its first profit since formation.
