Tata AIA to Buy 70% Stake in PNB Metlife

According to the minutes of a board meeting, Tata Sons along with it’s partner AIA Group will place a non-binding bid to acquire a 70% stake in PNB Metlife up to the tune Rs 2,700 crore and then merge it with Tata AIA Life Insurance Company.

This decision was made during the board meeting held on October 24, the details of which have been filed as part of Cyrus Mistry’s petition against the Trust in the National Company Law Tribunal (NCLT).

In PNB Metlife,

MetLife International Holdings LLC holds 26% stake,

Elpro International holds 21%

M Paloonji & Company holds18% stake

Jammu & Kashmir Bank Limited holds 5% stake held by and

The remaining 30% stake is held by Punjab National Bank.

M Pallonji and Company is owned by Ratan Tata’s friend and Mr. Mistry’s relative Mehli Mistry.

Mr. Ishaat Hussain, a Tata Sons board member and also chairman of Tata AIA Life Insurance Company in the board meeting after Mr. Mistry’s ouster proposed a deal structure under which Tata, along with AIA, will buyout the existing stake of all stake holders in PNB Metife, aggregating to 70%, other than Punjab National Bank Limited, followed by a merger of the two insurance entities.

As per the deal structure, PNB will sell its stake in the merged entity through a ‘put’ option within three years or Tata Sons and AIA can exercise a ‘call’ option in four to five years post merger.The initial outgo from Tata Sons would be in range of Rs. 1,500 crore to Rs. 2,700 crore with Tata Sons holdings in Tata AIA Life Insurance Company is expected to dilute from 51% to 45% post this deal.Tata AIA Life Insurance Company Limited (Tata AIA Life) is a joint venture company, formed by Tata Sons Ltd. and AIA Group Ltd. (AIA). Tata Sons holds a majority stake (51%) in the company and AIA holds 49 per cent through AIA International Limited. The company started operations in April 2001 aims to secure the lives of 3 Million consumers by 2020.

PNB MetLife has also been present in India since 2001 over 150 locations across the country and serves customers in more than 7,000 locations through its bank partnerships with PNB, JKB and Karnataka Bank Limited.When asked to comment, a Tata AIA spokesperson in an email reply said, “As a company policy, we do not comment on market rumours.” A mail sent to PNB Metlife spokesperson seeking comments failed to illicit any response.