Tube Investment of India to sell 14 per cent stake in Insurance business

Tube Investments of India (TIIL) will sell 14 per cent of Cholamandalam MS General Insurance (Chola MS) to its joint venture partner Mitsui Sumitomo Insurance Company of Japan (MSI). The company's Board members approved stake sale for Rs 882.67 crore on December 25.

Post equity transaction, the MSI is slated to increase its ownership in Chola MS from 26 per cent to 40 per cent. On the other hand TIIL's stake will remain at 60 per cent. The inter ministerial body Foreign Investment Promotion Board (FIPB), will take up foreign investment proposals on December 29.

TIIL is in the business of manufacturing of cycles and components, steel strips and tubes, and metal formed products. The company operates through three segments,viz. Cycles and Components, Engineering and Metal Formed Products.

Chola MS is a Joint Venture between Murugappa Group and Mitsui Sumitomo Insurance Group of Japan. Cholamandalam MS offers a wide range of products that include Accident, Engineering, Health, Liability, Marine, Motor, Property, Travel and Rural insurance for individuals and corporate. The company has 105 branches and over 9000 agents across the country.

MSI is a core non-life insurance company, and is a part of MS&AD Insurance Group Holdings Inc., one of the largest Insurance groups in the world. It has a wide international network which includes 42 countries and regions.

The stake sale announcement is a result of some crucial amendments made to the insurance law bill passed by the Indian Parliament in March. The amended law permits foreign direct investment (FDI) up to 49 percent from the earlier 26 per cent. Japanese Nippon Life announced to acquire additional stake in Reliance Life Insurance. AXA too announced its interest to raise its stake in Bharti AXA Life Insurance AIA Group also declared to increase its stake in Tata AIA Life to 49 percent.

The share price of TIIL increased by 16.75 per cent on bourses in early trades and is trading at Rs 448.95 on intraday basis. The stock price hit a 52 week high at Rs 467 on intraday basis.