Belgium-based Ageas Insurance International has entered into an agreement with Sundaram Finance to acquire 40% stake in Royal Sundaram General Insurance for Rs.1,520 crore. The acquisition is in line with Ageas’ strategy of expanding in various fast-growing markets in the world. The company is currently focusing on non-life insurance due to its high potential in the Indian market.
Sundaram Finance currently holds 75.9% stake in Royal Sundaram. Other companies like India Motor Parts & Accessories Ltd, TV Sundaram Iyengar & Sons Pvt. Ltd, and Sundharams Pvt. Ltd have 9.9%, 6.8%, and 3.8% stake in the general insurer, respectively. The rest of the shares are being held by various individual shareholders.
As a part of this deal, Sundaram Finance will divest 25.9% of its stake in the company. Ageas will acquire the remaining shares from other investors. Following the transaction, Sundaram Finance will hold 50% of the stake in Royal Sundaram and will continue to remain the largest shareholder in the company. Some of the existing shareholders of the company will own the remaining 10% stake in the company.
The transaction is yet to be approved by India’s insurance regulatory body, Insurance Regulatory and Development Authority of India (IRDAI). Company officials expect the transaction to be completed in the first quarter of the next fiscal year. For this transaction, Sundaram Finance received financial advice exclusively from JM Financial.
TT Srinivasaraghavan, the Managing Director of Sundaram Finance, stated that this deal will create a significant value for Royal Sundaram. He also noted that Ageas has a unique approach when it comes to creating strategic partnerships with various local firms in a country.
Ageas is a company renowned for its presence in different markets across the globe. In India, the company has acquired a 26% stake in IDBI Federal Insurance Co. Royal Sundaram is one of the top general insurance firms in the country with exceptional performance in health and motor insurance segments.
Source: Economic Times, the Hindu