The Kolkata-based corporate entity has acquired the entiring shareholding of GMR at a consideration of Rs 203 crore (Rs 2.3 billion), thereby valuing the insurance entity at Rs 413 crore (Rs 4.13 billion).
This marks the second corporate entity within a span of less two months to buy-out the stake holding of the core promoters of the insurance entity.
Exide Industries has acquired the majority stake at a price of Rs 4.13 crore (Rs 41.3 million) for one percentage holding, against Gujarat Ambuja Cements having acquired stake in the same entity at Rs 4.09 crore (Rs 40.9 million) for every percentage holding.
In late May, Gujarat Ambuja Cements bought out ING Vysya Bank's entire holding of 14.87 per cent stake in the life insurance entity for a consideration of Rs 60.9 crore (Rs 609 million). Incidentally Gujarat Ambuja has yet to receive necessary clearance from the Insurance Regulatory and Development Authority.
Exide has also informed the board of directors that it will subscribe to ING Vysya Insurance shares worth Rs 28.4 crore (Rs 284 million), taking its total holding in the life insurance venture to 50
It has further pointed out plans to invest Rs 17.5 crore in warants of ING Vysya Life Insurance, which will be converted into equity shares over the next three to four years.
ING Vysya Life officials told Business Standard that with Exide investing in the venture, induction of additional capital will fuel growth further especially at a time when the insurance company has been on a major growth path.
Aside from the two cash rich corporate entities, Enam also holds 10 per cent stake in the joint venture, along with the foreign partner ING's 26 per cent.
ING Vysya Life has a capital base of Rs 390 crore (Rs 3.9 billion), with the last induction of capital having taken place in January this year. GMR had for some time wanted to exit from the life insurance venture as it wished to focus on its core activities.
At the same time, the IRDA had indicated in a letter to the private life insurance entity that the foreign equity holding in ING Vysya Life is in breach of the 26 per cent cap on account of holdings of non resident Indians and overseas corporate bodies in GMR Industries Ltd. In a letter dated July 7 2003, IRDA had directed ING Vysya Life to comply with the said limit.
