Canara Bank to take IPO route to dilute 14.5% stake in subsidiary Canara HSBC Life Insurance

State-run Canara Bank on Friday, May 31, informed the stock exchanges that it would offload 14.5% stake in its subsidiary – Canara Bank HSBC Life Insurance Company – via an initial public offering (IPO).

The remaining 23% in Canara HSBC Life is held by the Punjab National Bank, which is also a public sector lender.

"Canara Bank has accorded approval for initiating the process of diluting 14.50% stake of the Bank in its subsidiary M/s Canara HSBC Life Insurance Company Ltd by listing the Company in Stock Exchanges (BSE/NSE) through Initial Public Offer (IPO)," a regulatory filing stated.

"The same shall be subject to approval of Reserve Bank of India and Department of Financial Services, Government of India," it added.

The size of the issue, opportune time and modalities of issue will be decided in due course, Canara Bank said.

₹8,500 crore fundraise plan

Shortly before notifying the exchanges about its IPO plan to cut stake in the life insurance arm, Canara Bank stated in another regulatory filing that its board has given the nod to raise ₹8,500 crore in FY25 via debt instruments.

Out of the total amount, up to ₹4,000 crore is to be raised through "Basel III Compliant Additional Tier I Bonds", and up to ₹4,500 crore via "Basel III Compliant Tier II Bonds", it added.

Shares of Canara Bank settled 2.56% higher at ₹118 apiece on the NSE. Year-to-date, the stock has climbed by around 33%, and the surge has been sharper at 90.5% in the last one year.