Reliance Capital arm buys AMP Sanmar Life

Mumbai/Chennai, July 31 | Updated: Aug 1 2005, 06:49am hrs
Reliance Life Insurance Company Limited, a subsidiary of Reliance Capital Ltd (RCL), on Sunday said it has agreed to acquire 100% equity capital of the Chennai-based AMP Sanmar Life Insurance. The decision gives RCL a quicker and easier entry into the life insurance sector via a buyout rather than by applying for a fresh licence.

Though a top official of Reliance Capital refused to divulge the pricing of the deal, market sources peg it at around Rs 300 crore as AMP Sanmar had low business volumes and inexpensive operations, mostly spreading across B-class cities. The company is also not expected to go in for a foreign partner.

The proposed acquisition will mark the immediate entry of RCL into the exciting growth area of life insurance, in one of the worlds fastest growing and most under-served markets, said the company.

FE was the first to report the story of AMP Sanmar being on the block.

The acquisition will be subject to necessary regulatory approvals, a press release issued by Reliance Capital on Sunday said. Reliance Capital is now part of the Anil Dhirubhai Ambani Enterprises (ADAE) group after the division in the Reliance Group.

Commenting on the sale, N Sankar, chairman of the Sanmar Group, said: I am happy that the sale is to an Indian entity committed to the life insurance business in India. The sale to a new entrant to this business means that the significant infrastructure built up by AMP Sanmar over the last three years, will continue to grow for the benefit of our policyholders.

AMP said that following an extensive review, a sale to a local buyer was determined to be the best option. AMP chief executive officer Andrew Mohl said the divestment of its interest in the Indian joint venture operation reflected a desire to focus on the companys core wealth management businesses in Australia and New Zealand.

AMP has been clear that its primary focus is on driving shareholder value through its core operations in Australia and New Zealand. Our presence in Asia will be purely around our asset management business, AMP Capital Investors, Mr Mohl said.