IndiaFirst deal with BNP Cardif hits a UBI pact hurdle

Synopsis

IndiaFirst Life's proposed stake sale to BNP Paribas Cardif is delayed. Union Bank of India has exited its corporate agency tie-up with IndiaFirst Life. This development impacts the deal closure and growth visibility. Bancassurance is a key business driver for IndiaFirst Life. Discussions are continuing regarding the renewal of the agreement.

Mumbai: IndiaFirst Life's proposed stake sale to BNP Paribas Cardif has hit a hurdle after Union Bank of India exited its corporate agency tie-up, delaying the deal closure, market sources told ET.

"The transaction has hit a delay after Union Bank of India discontinued its corporate agency tie-up with the insurer from April 1, prompting parties involved to reassess near-term growth visibility tied to distribution," said a source.

For IndiaFirst, bancassurance is a key driver of its business. Union Bank alone contributed about 25% of new business in FY2025, and its exit has introduced uncertainty into ongoing negotiations involving Warburg Pincus, which holds a 25.99% stake through Carmel Point Investments.

Agencies

BNP Paribas had emerged as the front-runner to acquire the stake, in what would mark the French lender's return to India's insurance market after exiting its joint venture with State Bank of India in 2021. The potential deal values IndiaFirst at more than twice its embedded value of about ₹5,000-5,200 crore. However, there was some discussion going on regarding the final stake, which could vary marginally above 26% depending on the treatment of employee stock options.

IndiaFirst Life is majority-owned by Bank of Baroda 64.98%, with Union Bank holding 9% as of March 31, 2025.

The Union Bank distribution agreement expired at the end of March and is yet to be renewed. "The agreement was up for renewal and discussions are continuing," a person familiar with the matter said.

Despite this, sources said that the development may act only as a temporary "speed breaker" and is unlikely to materially alter investor interest in the transaction, though timelines may stretch.

Bancassurance accounted for 76% of individual new business premiums in FY2025, with Bank of Baroda contributing 47% and Union Bank 25%. In group business, which made up 48.5% of NBP, around 52% was sourced from the two banks, which showed high concentration risks.

Union Bank also holds a 25.1% stake in Star Union Dai-ichi Life Insurance and has been reducing its stake in IndiaFirst. Over the past year, the insurer has been looking to diversify beyond bank-led distribution and build proprietary channels to sustain growth and support valuations.

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