Canada's Manulife Financial Corp and the Indian affiliate of Standard Life plc are among the suitors to place first-round bids for HSBC plc's Indian life insurance business, a stake valued around $200 million, people familiar with the matter said.
HSBC plc, Europe's biggest bank, is selling its 26 percent stake in a life insurance joint venture with two Indian state-run banks, as it sheds noncore businesses globally.
The winner of the auction will get immediate access to about 5,500 branches of the two state-run banks. Bancassurance - an arrangement in which a bank and an insurance firm tie up so that the insurer can sell its products to the bank's customers - is emerging as a key tool to sell insurance products across Asia as the life insurance industry matures in the region.
HDFC Life, a joint venture between India's top mortgage lender HDFC Ltd and British insurer Standard Life; Birla Sun Life, a venture between Indian conglomerate Aditya Birla Group and Canada's Sun Life; and ICICI Prudential Life, a joint venture between India's No. 2 lender ICICI Bank and Britain's No. 1 insurer Prudential, are among the bidders to submit first-round bids last week, the people said.
HSBC's two Indian partners in the venture - Canara Bank Ltd and Oriental Bank of Commerce Ltd - could also pare their stakes, the people said, although no final decision has been made on this. That could push the deal value to $800 million, including a bank distribution agreement, they added.
"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," said one of the sources directly involved in the process. "There are a very few good partnership opportunities available for foreign players in India, this venture is one of them."
HSBC, HDFC Life, ICICI Prudential, and Manulife declined to comment. Aditya Birla Nuvo, majority owner of Birla Sun Life, also declined to comment.
Canara Bank Chairman R.K Dubey was not immediately available for comment. Oriental Bank of Commerce Chairman S.L. Bansal declined to comment.
The sources declined to be identified because the sale process is confidential.
The sale is part of HSBC's exit from nonstrategic businesses. It has got out of about 50 businesses globally since Chief Executive Stuart Gulliver took over at the start of 2011, including its recent profitable sales of its $9.4 billion stake in Ping An