UK-based Legal and General Group has secured the in-principal approval from the Insurance Regulatory and Development Authority of India (IRDAI) to divest its stake in IndiaFirst Life Insurance Company to private equity firm Warburg Pincus.

Business Standard reported the development citing two sources familiar with the matter.

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IndiaFirst is a joint venture (JV) in which Bank of Baroda holds 44% shareholding, Andhra Bank owns 30% stake, and Legal and General holds the remaining 26% stake.

The development follows an announcement made by Legal and General to offload its stake in the life insurer to Warburg Pincus for INR7.1bn ($99.53m) in June this year.

A legal source told Business Standard that: “The final approval will come in time once the special-purpose-vehicle (SPV) is set up. Under the guidelines for private equity investments in the insurance sector, the company needs to set up an SPV to complete the share transfer. This is not a condition in other cases where a company buys a stake from another in the insurance space.”

This is the first private equity deal in the insurance sector which has been submitted before the IRDAI after the guidelines were published in December last year.

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IndiaFirst Life Insurance posted losses consistently between FY2010 and FY2014.

However, after RM Vishakha took over as managing director and CEO of the company, the insurer’s net profit surged to INR352m ($4.94m) at the end of FY2017 compared to a net loss of INR250m ($3.51m) in FY2014.

At the end of FY2018, IndiaFirst’s net profit rose 45% year-on-year to INR512m ($7.18m).