Private sector lender ICICI Bank has finalised to sell 6% in its life insurance business to Premji Invest, an investment firm of Wipro chairman Azim Premji, and a subsidiary of Singapore's state-owned enterprise Temasek Holdings in a deal worth Rs 1,950 crore.

The stake sale values ICICI Prudential Life Insurance at Rs 32,500 crore, making it the most valuable private-sector insurance company in the country.

Earlier this year, the valuation of the insurer stood at Rs 36,000 crore and the firm was valued at Rs 38,000 crore when it handed out stock options to its employees last year.

"The board of ICICI Bank has at its meeting today (Tuesday) approved, subject to government and regulatory approval, the sale of 6% out of ICICI Bank's shareholding in ICICI Prudential Life Insurance," said the bank in a filing with Bombay Stock Exchange (BSE).

While Premji Invest and its affiliates will acquire 4% stake from ICICI, the remaining 2% will be sold to Compassvale Investments Pte Ltd, a wholly-owned subsidiary of Temasek, The Economic Times reported.

With HDFC Life and Reliance Life selling stakes to "financial and strategic investors", stake-sale activity has been on the rise in the country's private-sector insurance space. This is seen as a precursor towards listing some of the firms on exchanges.

As of now, the insurance regulator has not defined the terms for listing of insurance companies, but a clause in the Insurance Regulatory & Development Authority (IRDA) Act of 2000 that says 10 years of operations are mandatory for listing may be "enforced soon".

Following the completion of the deal, ICICI Bank's stake will come down to about 68% in the insurance venture, while its British partner Prudential Plc will hold a stake of 26%. An amendment made to IRDA Act passed earlier this year allows Prudential Plc to increase its stake to 49% in the joint venture.

The deal marks the second transaction by Premji Invest in life insurance after it bought 0.95% stake in HDFC Life from HDFC for Rs 200 crore in December last year.