Hemendra Kothari, the former chairman of DSP Merrill Lynch, is set to acquire Ambuja Cements' stake in ING Vysya Life Insurance for around Rs 190 crore.
A company source said the deal was close to being finalised and approval from the Insurance Regulatory & Development Authority would be sought soon. Kothari could not be reached for comment.
The deal values the company at around Rs 1,650 crore.
Ambuja Cements holds 11.5 per cent in the life insurance venture, with Dutch financial services giant ING holding 26 per cent. Exide Industries is the largest shareholder in the life insurance company with a 50 per cent stake, while others, including Ambuja Cements and Enam Group, hold 24 per cent.
The Indian shareholder of ING Vysya Life Insurance has been looking to divest a part of its holding in the venture as its investment was failing to yield much dividend and the valuation remained sluggish.
In addition, ING has announced its intention to exit the insurance business globally by 2012. It plans to focus on banking.
ING Life was set up in 2001 as a joint venture of ING Insurance International, ING Vysya Bank and GMR Industries. Subsequently, GMR started exiting the financial services business to focus on infrastructure.
The company has remained among the smaller players in the life insurance arena and was placed 12th in terms of first premium income earned between April and December 2009, the latest period for which data are available with Irda. At the end of December, there were 23 life insurance companies in India, including Life Insurance Corporation. During the first nine months of the financial year, it earned a premium income of Rs 440 crore, a decline around 8 per cent from the corresponding period last year. In contrast, industry sales rose over 29 per cent.
The investors got into the non-allied business hoping to earn good returns. However, the global financial meltdown and regulatory moves, such as a cap on charges, have affected the business.
Apart from ING, a number of other players such as the Anil Dhirubhai Ambani Group is looking to shed stakes through a mix of private placement and public offer in its life insurance venture, Reliance Life, to step up the growth of the business. Players such ICICI Prudential and HDFC Standard Life will list in the coming months to raise capital.