German multinational financial services firm Allianz SE will explore “new opportunities” in India both as an investor and an operator.

This gains significance as the government is willing to open up the insurance sector by allowing 100 per cent foreign direct investment.

On Monday night, Allianz announced the decision to divest its 26 per cent stake in the two joint ventures with Bajaj group — Bajaj Allianz General Insurance Company and Bajaj Allianz Life Insurance Company — for an estimated consideration of 2.6 billion Euro.

“As the proceeds become available, Allianz will consider options for their deployment that support the company’s strategic ambitions, in particular the reinvestment of sale proceeds into potential new opportunities in India,” the company said.

With capital being a key requirement for widening the insurance net in the country, finance minister Nirmala Sitharaman at the last union budget had said that the FDI limits for the insurance sector will be raised from 74 to 100 per cent. However, this enhanced limit will be available only for those companies which invest the entire premium in India.

The government is currently working on developing the guardrails and conditionalities associated with opening up the sector to foreign players.

Trigger point

Following regulatory approvals from the Competition Commission of India and the Insurance Regulatory and Development Authority of India, the sale of 26 per stake of Allianz is expected to happen in tranches.

On the completion of the first tranche of acquisition of 6.1 per cent, Allianz will be classified as an investor from its current classification of a promoter. Under the share purchase agreement, group companies — Bajaj Finserv, Bajaj Holdings and Investment and Jamnalal Sons will acquire approximately 1.01 per cent, 19.95 per cent and 5.04 per cent, respectively, aggregating to 26 per cent in each of the insurance companies.

Solo strength

Sanjiv Bajaj, chairman and managing director of Bajaj Finserv, on Tuesday said
both the life insurance and general insurance companies have adequate strength to
run the business on their
own and there would be no change in the operational level at either company.

“The amount of ₹24,180 crore that we are going to invest to buy a 26 per cent stake in both insurance companies, I believe this would be one of the largest investments in financial services space in India, reinforcing the Bajaj Group’s commitment and belief in the India opportunity,” Bajaj told CNBC TV18.

Bajaj, however, said that both the insurance companies are well capitalised and even as listing is under consideration in the future, there is no immediate timeline for the same.

“The regulator has been engaging especially with the large insurance companies on the possibility of listing and the glide path and timelines towards that. This is something that has been taken up by both our boards as well. Given the significance of Allianz’s exit, it will take some time for the rebranding, regulatory approvals etc,” he said.

Bajaj Finserv stocks at ₹1,845 were down 1.43 per cent at the BSE on Tuesday.