IDBI Bank is divesting its entire stake in Ageas Federal Life Insurance Company Ltd (AFLI) to Ageas Insurance International NV (Ageas) for Rs 580.20 crore. The lender said in a regulatory filing to the stock exchanges that it will sell the entire stake of 20 crore shares to Ageas pursuant to exercise of call option by the latter.

The IDBI-Ageas transaction is subject to regulatory approvals. AFLI, which received an IRDA licence in 2007, is a joint venture among IDBI Bank, Federal Bank and Ageas, which is one of Europe’s largest insurance firms.

With the acquisition, Ageas’ stake will rise to 74 per cent in the joint venture. It will thus become the first company in the life insurance sector where the foreign partner will have a shareholding at the maximum permissible limit.

IDBI Bank added that the stake sale is expected to be completed in the second quarter of the current fiscal year, subject to the terms and conditions set out in the share purchase agreement. Ageas said in a statement that Federal Bank will maintain its 26 per cent shareholding in AFLIC.

“IDBI exits as a shareholder but remains a distribution partner. This transaction is a second step up for Ageas after the increase of its stake from 26 per cent to 49 per cent in December 2020.”

“This investment aligns with Ageas’s strategy to expand in regions in which it is already present and in promising markets with a low insurance penetration and high potential for growth such as the Indian Life insurance market,’’ the insurer added.

It may be recalled that in August 2020, Ageas had announced an agreement with IDBI Bank to acquire an additional 23 per cent stake in insurance JV. Later that year, Ageas obtained all regulatory approvals which resulted in the transaction being completed.