The proposed sale of IDBI Bank’s stake in IDBI-Federal Life Insurance has been torpedoed by the entry of LIC as a major financial investor in the bank.
The move by LIC has stopped the hunt for prospective bidders. According to people familiar with the matter, most bidders had already withdrawn, except for Aditya Birla Capital.
LIC’s forthcoming investment in the troubled lender may lead the process to be officially called off. With LIC set to become a prominent shareholder, other insurance companies are unlikely to continue to be interested in investing in IDBI-Federal.
According to one source quoted in press reports, LIC’s coming is the best thing to have happened to IDBI-Federal.
On Friday, India’s insurance regulator allowed LIC to buy up to 51% in IDBI Bank.
Once the transaction is consummated, LIC will also become a significant owner of private sector insurer IDBI Federal Life Insurance.
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