Canadian financial holding company Fairfax Investments is reportedly mulling a partial or even a full exit from ICICI Lombard; a joint venture between Fairfax and ICICI Bank Limited, considered India’s second largest bank.
Sources close to the matter told
CNBC moneycontrol that the deal would allow Fairfax - which currently holds a 35% stake in the venture - to facilitate its entrance into the Indian general insurance space. The Canadian company needs to reduce its stake in order to properly participate in the market in accordance with the rules.
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Fairfax had issued a proposal to the Insurance Regulatory and Development Authority (IRDA) for a new general insurance venture but the agency declined it, noting that Fairfax first had to meet stake dilution requirements. IRDA also advised that executives are not permitted to hold positions within the boards of both insurance ventures.
The agency might request Fairfax to dilute its stake in ICICI Lombard to 10%.
In October 2015, Fairfax purchased an additional 9% stake in ICICI Lombard, raising its total to 35%.
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