Bank of India to sell 25 per cent in Star Union Dai-ichi

Mumbai: Bank of India (BoI) on Friday said that it proposes to sell 25.05 per cent stake in its insurance joint venture Star Union Dai-ichi Life Insurance Company for at least Rs 1,106 crore.

The Reserve Bank of India had removed BoI from its prompt corrective action (PCA) framework in January, easing some restrictions on lending. The bank, which now needs funds for growth, expansion and to meet regulatory capital, would be offloading some of its non-core assets to raise funds, said analysts.

Inviting non-binding bids for the partial stake sale, the bank said it wants to sell over 6.48 crore equity shares, or 25.05 per cent stake, at a floor price of Rs 170.50 apiece. The other partners in the joint venture are state-owned Union Bank of India (25.10 per cent) and Japan's Dai-ichi Life Holdings Inc. (45.94 per cent). Bank of India has a 28.96 per cent stake.

At the floor price, the share sale would fetch over Rs 1,106 crore to the lender.

Anil Gupta, Sector Head-Financial Sector Ratings at ICRA, said, “Despite the recent capital infusion from the government, the bank will require Rs 1,000 crore to Rs 1,500 crore growth capital as well as capital to meet the increased regulatory capital requirement. The divestment will help the bank to meet these capital requirements.”