Principal Financial eyes stake in IDBI cos

Sitanshu Swain

Mumbai, May 27: In a bid to increase its Indian exposure, US-based Principal Financial group -- the world’s largest pension market player -- is eyeing a stake in IDBI Bank and IDBI Infotech.

The Principal group’s interest in the domestic banking sector has also been influenced by the Centre’s recent decision to raise the foreign direct investment (FDI) in the domestic banking sector from 20 per cent to 49 per cent.

Principal, which has a successful joint venture with the Industrial Development Bank of India (IDBI) for the mutual fund business, is trying to consolidate its partnership with IDBI by entering into other areas of operations with the premier financial institution of the country.

Talks between IDBI and Principal have commenced to decide about the offloading of stake in both IDBI Bank and IDBI Infotech in favour of Principal.

At present IDBI Bank, which has not fared well during 2000-2001, does not have any FDI and at 57 per cent, IDBI remains the major shareholder of the bank. Another 14 per cent of the bank lies with Sidbi, while 29 per cent of the bank is held by public.

It is expected that the involvement of the Principal group will help IDBI Bank to make a turnaround, which has been earlier successfully implemented in the mutual fund business.

In just six months of partnership, IDBI-Principal has doubled its fund size from Rs 660 crore to Rs 1,300 crore. "I am totally bullish about our fund’s performance," said IDBI-Principal managing director and chief executive officer Sanjaya Sachdeva. According to Sachdeva, the fund has an aggressive target of doubling the its size as well as unitholders during 2001-2002.

The fund, which presently has a base of 1,50,000 unitholders, has always remained innovative and customer-friendly in its business strategy. "We have been the first to launch a life stage plan and sell it through post offices," he said, adding that the fund is planning to launch many more innovative schemes soon.