Canada based financial services group Manulife Financial and HDFC Life, the Indian affiliate of Standard Life, have submitted their bids to acquire HSBC's Indian life insurance arm, which has a market value of nearly $200m.
As part of a strategy to refurbish operations to boost the capital levels and improve efficiency, HSBC is offloading its non-core operations and assets to focus more on the rapidly-growing and profitable markets across the globe.
The London-headquartered lender is all set to divest its 26% stake in India life insurance JV Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, as reported by Reuters.
One of the sources directly involved with the bidding process was quoted by the news agency as saying, "The biggest attraction for any Indian or foreign bidder in this joint venture would be the vast distribution network, which is absolutely essential in a country like India."
In the JV insurance company, which was launched on 16 June 2008, Canara bank has 51% shareholding, Oriental bank of Commerce owns 23% and the rest are vested with HSBC Insurance (Asia Pacific) Holdings.
The firm, which will successfully acquire the stake in the auction, will get access to approximately 5,500 branches of the two aforesaid lenders, allowing the purchaser to market its product to the bank's customers.
It is expected that HDFC Life, a JV between HDFC and Standard Life; Birla Sun Life launched by Aditya Birla Group and Sun Life; and ICICI Prudential Life, set up ICICI Bank and Prudential, are among the potential suitors, who submitted first-round bids.
HSBC has offloaded nearly 50 nonstrategic businesses around the globe since appointment of chief executive Stuart Gulliver took the rein of the lender in the beginning of 2011.
