Prudential to seek 12-18 months for stake dilution in ICICI Prudential Life

Prudential is likely to ask the insurance regulator to allow up to 12–18 month to dilute its stake in ICICI Prudential Life Insurance after the UK insurer agreed to acquire a 75% controlling stake in Bharti Life Insurance Company.

Under existing insurance regulations, a foreign insurer cannot hold promoter stakes in two life insurance companies in India. Following the Bharti Life acquisition, Prudential may therefore be required to reduce its holding in ICICI Prudential Life Insurance to below 10% from the current 21.91% and cease to be classified as a promoter of the insurer.

Post the announcement, shares of ICICI Prudential Life Insurance fell nearly 9% to hit a 52-week low to around Rs 490 before recovering partially to trade 1% higher today at Rs 505 on the BSE.

Prudential has said it will acquire the stake in Bharti Life for Rs 3,500 crore as part of a restructuring of its India operations, through acquisition of shares from Bharti Life Ventures Pvt Ltd and funds managed by 360 ONE Asset Management, subject to regulatory approvals and other conditions.

“IRDAI is expected to provide Prudential adequate time to execute an orderly dilution process given the size of the stake and the listed nature of ICICI Prudential Life Insurance,” said a source.

ICICI Bank, which holds 51% in the joint venture, said it will continue to retain majority ownership in ICICI Prudential Life Insurance and remains committed to the business for the long term.