Tube Investments climbs 11% on stake sale in insurance JV

NEW DELHI: Shares of Tube Investments of India climbed over 11 per cent to hit fresh 52-week high in Monday's session after the company's board approved selling of its 14 per cent stake in the joint venture (JV), Cholamandalam MS General Insurance, for a consideration of Rs 882.67 crore.

The stock climbed 11.23 per cent to hit a high of Rs 445.05 on BSE, breaching its previous high of Rs 439.90 hit on October 20.

The company would sell its stake to the existing JV partner Mitsui Sumitomo Insurance. The stake sale pegged the value of the joint venture company at Rs 6,305 crore.

L RamKumar, MD, Tube Investments, said in an interview to ET Now that his company will use the proceeds to retire debt. It would take another 2-3 months for the company to get the required approvals, the spokesperson said. The long-term debt of the company stood at Rs 1,000 crore.

Earlier, MM Murugappan, Chairman of Tube Investments, in a regulatory filing to BSE said, "I am delighted that Mitsui Sumitomo is increasing its stake in Chola MS to 40 per cent. This will further strengthen our relationship with Mitui Sumitomo and help realise our vision in making Chola MS the most respected general insurer in India."

Foreign partners can bring in foreign direct investment ( FDI) up to 49 per cent in the insurance sector. In November, Japanese Nippon Life agreed to buy an additional 23 per cent stake in Reliance Life Insurance for Rs 2,265 crore.

AXA in May announced its intentions to increase its stake in Bharti AXA Life Insurance. UK's Bupa too has raised its stake in Max Bupa JV.