Shedding debt

Mumbai, July 25: DLF, the country’s largest real estate company, today sold its 74 per cent stake in its life insurance joint venture with Prudential International Insurance Holdings Ltd (PIIHL) to Dewan Housing Finance Corporation Ltd (DHFL) for an undisclosed sum.

The stake sale is part of its plan to sell its non-core assets and pare its debts. DLF has sold assets in excess of Rs 6,000 crore as part of this exercise.

The real estate giant recently entered into a business transfer agreement with Goyal MG Gases Pvt Ltd to transfer a 11.2 MW wind turbine unit in Karnataka for a lump sum consideration of Rs 29.52 crore.

It also sold a 150 MW wind turbine unit situated in Gujarat to a subsidiary of Bharat Light & Power Pvt Ltd for Rs 325.38 crore.

In a statement today, the real estate company said it was exiting DLF Pramerica Life Insurance Company Ltd (DPLI). It added that financial details of the deal would be revealed after the transaction secured all the approvals.

Prudential Financial Inc (PFI), a financial services company with around $1.06 trillion of assets under management as of March 31, 2013, does business under the trade name Pramerica in selected countries outside the US.

Once the deal is closed, the company will be renamed DHFL Pramerica Life Insurance Company Ltd. (DHFL Pramerica).

According to DHFL, the business of the current entity will continue without interruption and the current management will continue to run the joint venture.

“This joint venture will help DHFL extend its philosophy of financial inclusion by broadening the range of products and services available to our customers as well as other customers, across India, especially in Tier 2 and 3 cities/towns. We believe that this joint venture will generate long-term value for DHFL shareholders,” said DHFL chairman and managing director Kapil Wadhawan.

DPLI started operations in India on September 1, 2008 and operates through its agency and third party distribution channels. According to the annual report of DLF for the year ended March 31, 2013, the life insurer posted a loss of Rs 132.39 crore and it issued a little over 1 lakh policies during the year.

India’s highly competitive insurance sector has witnessed several deals over the past couple of years and these include Future Retail Ltd’s sale of its 22.5 per cent in Future Generali Life Insurance Company to Industrial Investment Trust Ltd (IITL) for almost Rs 300 crore.

Earlier this year Exide bought out the 50 per cent stake held by three partners in ING Vysya Life Insurance Company for Rs 550 crore. As a result, the insurer became a wholly owned subsidiary of Exide Industries.