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India story strong; Prudential to up stake in ICICI joint venture

October 15, 2008 15:14 IST

Assuring a strong commitment to India and its alliances with ICICI Bank, UK financial giant Prudential has said it is open to raising its stake in the insurance joint venture with the country's banking major.

"The India growth story remains strong and we are committed to our presence in the country and our two joint ventures with ICICI Bank," the UK-based Prudential's CEO Mark Tucker told PTI in a telephone interview.

Prudential has two JVs with ICICI Bank in the country, one in insurance business with 26 per cent stake and another in the mutual fund business with 49 per cent equity.

While asserting that the two businesses were well-capitalised and did not need any immediate capital infusion, Tucker said Prudential was open to consider raising its stake in the insurance JV as and when the regulatory framework permitted the same.

However, Tucker ruled out any plans by Prudential to hike its stake in the mutual fund business. As per current regulations, a foreign partner cannot have over 26 per cent stake in an insurance business, but there is no such cap in the mutual fund business.

"Our insurance business is very well capitalised... There is no need to infuse further capital into it," Tucker said.

Late last week, there have been rumours about Prudential pulling out of the JV with ICICI Bank, which itself has been target of an onslaught of speculations casting doubts over its financial health.

ICICI Bank has been strongly contested these rumours and its stand has been endorsed by the government, RBI and global rating agencies such as Moody's and S&P as well.

Tucker said its JV with ICICI Bank was growing stronger and has proved to be highly productive and value enhancing.

"We are in India for a long term and our commitment to the country as well as our partner remains strong," Tucker said.

Noting that going forward India would remain the key component of its Asian growth strategies, he said Prudential's long-term commitment to India and two JVs with ICICI Bank are key to its future business plans.

Announcing its first-half results recently, Prudential had said Asia would continue to be a powerful growth engine for the company, even as it noted that the US life insurance sector has been adversely affected by the current.

Within Asia, the company reported, 'very strong new business growth in a number of markets', including a 45 per cent growth in India.

Asked about how long he expects the markets to take to recover from the current crisis, Tucker said it should not really matter for long-term investors how much time it takes and this is just a cycle that would end some time.

Tucker also expressed his optimism that markets like India would only emerge stronger through these cycles.

The Prudential CEO asserted that the companies with a strong and committed management team and robust underlying fundamentals had nothing to worry in the current crisis.

"While investor sentiments and business environment have been hit, it should not be more than many of the cycles," he added.

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