Friday, October 5, 2012

MetLife to buy back shares from Srini Raju, J&K Bank

Chintalapati Srinivasa Raju (popularly known as Srini Raju), an IT Professional, Entrepreneur and Private Equity Investor and Jammu & Kashmir Bank are likely to sell shares to MetLife as the American insurance giant aims to induct Punjab National Bank in the joint venture.
Srini Raju is the co-founder and Chairman of Peepul Capital (successor to iLabs Venture Capital Fund). Besides funding and mentoring next generation entrepreneurs, he plays an active role in building educational institutions of higher learning.
Srini Raju plans to exit from the joint venture after selling his entire stake of 5%. His total managing assets is worth $1 billion. While, J&K Bank will offload a part its 11.5% stake, sources close to the development said.
After the induction of Punjab National Bank with 30% stake, the joint venture will be renamed as PNB MetLife. As per the current law, a foreign insurer can own only 26% stake in India.
After the deal, MetLife stake will drop to about 18%, which will allow the insurer to buy back Raju’s stake and some shares of Jammu & Kashmir Bank. Other existing Indian shareholders M Pallonji & Co and Dabriwala family of Elpro, will retain stakes even though the latter's holding may drop from 20% to 14%.
Last month, the Insurance Regulatory and Development Authority approved MetLife's proposal to transfer shares to PNB at market price. MetLife had originally proposed to transfer 30% stake to PNB at notional value.
But the regulator's insistence on issuing fresh shares at market price will lead to stakes of existing investors getting diluted. IRDA wanted a reduction in the equity stake of some shareholders and maintaining of solvency margin according to its directions.

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