Canara Bank to Float IPOs of Canara Robeco AMC & Canara HSBC Life Insurance

Canara Bank has received approval from the Reserve Bank of India (RBI) to divest equity stakes in its two subsidiaries, Canara Robeco Asset Management Company (AMC) and Canara HSBC Life Insurance Company, through Initial Public Offerings (IPOs). The planned divestments involve a 13% stake in Canara Robeco AMC and a 14.5% stake in Canara HSBC Life Insurance.

The RBI has mandated that Canara Bank reduce its shareholding in both entities to 30% by October 31, 2029, in line with regulatory requirements and exemptions granted by the Government of India.

Canara Robeco AMC: A Player in Asset Management

Established in 1993 as Canbank Mutual Fund, Canara Robeco AMC is India’s second-oldest asset management company. It became Canara Robeco Mutual Fund in 2007 after Canara Bank partnered with the Robeco Group, which is now part of Japan’s ORIX Corporation. The AMC offers investment solutions, including equity, debt, and hybrid funds, catering to both retail and institutional investors. Canara Bank holds a 51% stake in the AMC, while ORIX Corporation owns the remaining share.

The IPO of Canara Robeco AMC will position it as the fifth publicly traded mutual fund company in India, joining others like HDFC AMC and Nippon Life India AMC.

Canara HSBC Life Insurance: A Bancassurance Model

Founded in 2008, Canara HSBC Life Insurance Company operates as a joint venture between Canara Bank (51%), HSBC Insurance (Asia Pacific) Holdings Ltd. (26%), and Punjab National Bank (23%). Headquartered in Gurugram, Haryana, the company follows a bancassurance-led distribution model and operates over 100 branches across India.

IPO Process & Timeline

Canara Bank initiated steps for these IPOs in December 2023, with approvals progressing throughout 2024. The lender finalized merchant bankers for Canara HSBC Life Insurance and completed the Request for Proposal (RFP) process for Canara Robeco AMC’s IPO.

Stock Market Reaction

Shares of Canara Bank rose by 2% to ₹110.15 following the announcement today. The bank’s stock has gained over 24% in the last year, with a three-year return of 162%. The company’s market capitalization now stands at over ₹98,000 crore.

All in all, the listing of Canara Robeco AMC and Canara HSBC Life Insurance is major for Canara Bank. These IPOs are expected to attract interest, given the importance of the mutual fund and life insurance sectors in India. The market will closely watch the developments, as the result of these IPOs could influence similar decisions by other public sector banks.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.