Warburg may buy 20.5% in IndiaFirst from Andhra Bank

The recently-announced mega mergers of 10 state-run banks into four are beginning to have an impact beyond traditional banking. IndiaFirst Life Insurance, in which Andhra Bank owns 30 per cent equity, might see Warburg Pincus emerge as its biggest shareholder.

The private equity investor, which already owns 26 per cent in the insurer, might buy an additional 20.5 per cent stake from Andhra Bank. State-run lenders Bank of Baroda currently owns 44 per cent and Andhra Bank 30 per cent in the life insurer.

Andhra Bank may earn ₹700 crore by selling the stake in India-First Life Insurance, industry sources told ET.

“Warburg Pincus is in talks to buy 20.5 per cent stake in IndiaFirst Life Insurance from Andhra Bank,” said a source close to the development. “Andhra Bank is looking to sell partially its stake in the company.”

In February, Carmel Point Investments India Private Limited, a Mauritius-based company owned by private equity funds that Warburg Pincus LLC manages, bought 26 per cent in IndiaFirst for ₹710 crore, valuing the company at ₹2,800 crore. This is the first deal wherein a private equity fund has taken an interest in a life insurer, the company claims.

Bank of Baroda has become the third largest bank after merging Dena Bank and Vijaya Bank with itself. After the merger of Andhra Bank with Union Bank of India and Corporation Bank, it will have to sell products of Star Union Daichi. All bank JV agreements with insurers and their bancassurance arrangements that allow insurance JVs to sell insurance from bank branches will now be subject to adjustments, reflecting the impact of the mergers.

IndiaFirst Life will raise fresh capital of about ₹30 crore by selling 100 million shares to existing investors this week.

RM Vishakha, CEO, IndiaFirst Life Insurance, declined to comment. Mails sent to Warburg Pincus did not get any response.

IndiaFirst Life Insurance sells policies through 14,000 bank branches. IndiaFirst Life was launched in 2010 and now manages ₹15,000 crore of assets as on March 31, 2019. The company has a paid-up share capital of ₹625 crore. It had reported profit of ₹61.60 crore last financial year.

Warburg Pincus, which has more than $44 billion in private equity assets under management, invested in Indian companies such as Lemon Tree, PVR, Quikr, Kalyan Jewellers, Biba Apparels and Piramal Realty.

It also owns stakes in ICICI Lombard General Insurance, IDFC First and AU Small Finance Bank.