Mumbai, Feb. 18: Sundaram Finance is acquiring the 26 per cent stake of its UK partner RSA Group in Royal Sundaram Alliance Insurance Company for Rs 450 crore.
At present, Sundaram Finance and its associates own a 74 per cent stake in the company, with RSA Group holding the rest. The acquisition will take their stake in the non-life insurance venture to 100 per cent.
RSA Group has recently reviewed its business globally and has decided to exit non-core markets such as India, a statement issued by the non-banking finance company (NBFC) today said.
Royal Sundaram Alliance Insurance Company was granted a licence in 2000 to operate in the non-life insurance space.
The company offers motor, health, personal accident, home and travel insurance for individuals and fire, marine, engineering and liability policies for commercial clients.
'Sundaram Finance and RSA Group have reached an agreement whereby RSA has agreed to sell its entire 26 per cent stake in Royal Sundaram Alliance Insurance Company to Sundaram Finance for a consideration of Rs 450 crore, subject to all regulatory approvals,' the statement said.
While Sundaram Finance alone holds a 49.9 per cent stake, it will increase to 75.90 per cent after the acquisition.
Royal Sundaram Alliance Insurance Company reported a gross written premium of Rs 1,437 crore for 2013-14. It was the first private non-life insurance company licensed to operate in India. The company now has over 6.7 million customers and 1,700 employees.
The exit of RSA comes at a time when the Union government is set to seek Parliament's approval to increase in the foreign direct investment cap in the insurance sector to 49 per cent from 26 per cent.
T.T. Srinivasaraghavan, managing director of Sundaram Finance, said: 'Given the strong synergy with the parent's auto lending and housing finance business, this will further strengthen our presence in the retail financial services space.''
Sundaram Finance was, however, silent on whether it will now bring in another partner following the exit of RSA Group.
Nippon Life
Reliance Capital Asset Management (R-CAM) today said it has completed the regulatory clearance process for the sale of an additional stake to Japan's Nippon Life, following approvals by the CCI and the EPFO.
The deal is now expected to close by next week. Nippon Life Insurance, which manages $500 billion in assets and is among the largest in the world, agreed in November 2014 to increase its stake in R-CAM from existing 26 per cent to 49 per cent in multiple tranches, subject to regulatory approvals.
