Sundaram Finance and its associates and Belgium’s insurance major Ageas Insurance International N.V have concluded a deal for the acquisition of 40 per cent share capital in non-life insurance company Royal Sundaram General Insurance Co Ltd (Royal Sundaram) by the latter for a total consideration of ₹1,520 crore.
As of March 31, Sundaram Finance held 75.90 per cent in Royal Sundaram, while associate companies such as India Motor Parts, TVS & Sons and Sundharams and three family members held the remaining portion, according to Royal Sundaram’s latest annual report.
Sundaram Finance proposes to divest 25.90 per cent, thereby retaining 50 per cent of its holding, post the divestment. Some of the existing shareholders will hold the balance 10 per cent in Royal Sundaram.
“For the next phase of growth, we are delighted to be partnering with Ageas, whose global experience, including in several Asian countries, will be an asset. Ageas is unique in its approach of working through local partnerships and joint ventures across Asia and we believe this can create significant value for Royal Sundaram,” said TT Srinivasaraghavan, Managing Director, Sundaram Finance Ltd.
The transaction is subject to certain conditions, including the approval of the Insurance Regulatory and Development Authority of India and other regulators. The transaction is expected to close in the first quarter of 2019.
JM Financial acted as the exclusive financial advisor to Royal Sundaram.
“Being already present in the Indian life insurance market, we now will be able to also fully grasp opportunities in the non-life market. We are confident that Ageas’ insurance expertise combined with Sundaram Finance’s market knowledge and position will take Royal Sundaram to a next level in terms of size and profitability,” said Bart De Smet, CEO, Ageas.
Ageas is already present in India in the life insurance space through IDBI Federal Insurance Co Ltd.
Royal Sundaram, India’s first privately-owned non-life company, is holding 9th position in the privately-owned category of general insurance market with strong positions in motor and health insurance.
Over the past 18 years, the company has built a reputation in the market for its service, notably in claims management.
The company’s pan-India network includes more than 5,600 agents and 700 branches (consisting of its own branches and that of Sundaram Finance) and well-established relationships with banks and other distribution partners, off and online.
For 2017-18, Royal Sundaram generated gross written premium (GWP) of ₹2,643 crore and achieved a profit after tax of ₹83 crore, while registering an average annual growth rate of 19 per cent and 56 per cent in GWP and profit, respectively, between 2015 and 2018.