HDFC on Friday said it will sell 9 per cent stake in HDFC Life to its British joint venture partner Standard Life for a little over Rs 1,700 crore.
The British firm would be increasing its stake to 35 per cent from 26 per cent as the Indian government has allowed up to 49 per cent FDI in the domestic insurance sector.
In a regulatory filing, HDFC (Housing Development Finance Corporation) said it would sell little over 17.95 crore shares in the insurance joint venture at a price of Rs 95 apiece to Standard Life.
This 9 per cent stake would be worth over Rs 1,705 crore and the stake sale would be subject to necessary regulatory approvals.
Post the sale, HDFC's stake in the joint venture would come down to 61.65 per cent.
HDFC said Standard Life's stake in the joint venture was earlier restricted to 26 per cent as per the FDI norms. But they had understanding that the British insurer would raise stake to parity with HDFC at such time as legislation allowed.
After the increase in the FDI limit in the sector, the two companies have had discussions and the agreement will see Standard Life increase its stake in HDFC Life to only 35 per cent, it added.
Commenting on the development, HDFC Chairman Deepak Parekh said: "I am delighted that Standard Life is increasing its stake in HDFC Life to 35 per cent. The founding shareholders are also committed to obtaining a listing for HDFC Life. This will allow investors to participate in the growing Indian insurance sector."
Standard Life plc CEO Keith Skeoch said, "The proposed investment demonstrates our long-term commitment to India and the future success of HDFC Life."
HDFC Life Managing Director and CEO Amitabh Chaudhry said, "This transaction is in line with the long-term vision of shareholders to jointly build a world class life insurance company. We continue to focus on long-term protection and saving needs of India and delivering sustainable performance."
Standard Life is listed on the London Stock Exchange and has around 1.2 million individual shareholders in over 50 countries around the world.
It has businesses in the UK, Europe, North America, Asia and Australia.