In pursuance of the proposed sale of a part of its shareholding in ICICI Lombard General Insurance Company (ICICI General) via an initial public offering, ICICI Bank on Tuesday said its joint venture agreement with Canada-based investment firm Fairfax Financial Holdings has been terminated.
This move is pursuant to a termination agreement signed on July 3, the bank said in a stock exchange notice.
“The termination agreement has customary provisions for protection of parties in the event of non-completion of the proposed initial public offering on or before a mutually agreed date,” it said.
As of March-end 2017, ICICI Bank had 63.31 per cent ownership interest in ICICI General.
In May 2017, Fairfax Financial Holdings said it offloaded 12.18 per cent in ICICI General to a clutch of investors, including Warburg Pincus, Tamarind Capital Pte and IIFL Special Opportunities Fund, for ₹2,473 crore.
In 2015, Fairfax Financial Holdings had increased its stake in the Indian insurance firm to 35 per cent by picking up an additional 9 per cent stake in ICICI Lombard for about ₹1,600 crore.
Fairfax, led by India-born Canadian billionaire Prem Watsa, has been aggressive in India with investments across real estate, infrastructure and logistics sectors. Reducing its stake in ICICI Lombard could be part of a plan that will allow the Canadian firm to start a new general insurance joint venture in India.
Under existing rules, foreign investors cannot own more than 10 per cent of two insurance companies.
The Insurance Regulatory and Development Authority of India (IRDAI) has already given its initial approval to Fairfax’s new insurance venture.
To be established along with Oben General Insurance, Fairfax will have a 49 per cent stake in the venture.