Europe’s insurance major Ageas Insurance International (Ageas) has picked up a 40% stake in Royal Sundaram General Insurance Company for Rs 1,520 crore. Ageas, an €34-billion insurance major, is already present in India in the life insurance space through IDBI Federal Insurance Co.
NBFC Sundaram Finance (SFL), which currently holds 75.90% in Royal Sundaram, has decided to divest 25.90%. The other major shareholder – IMPAL (India Motor Parts & Accessories), which holds 9.98% now, has decided to divest 2.68% stake in the company. Sundaram Finance, along with IMPAL and other shareholders, has signed an agreement to enable Ageas to pick up 40% stake in Royal Sundaram.
JM Financial acted as the exclusive financial advisor and J Sagar & Associates acted as the legal advisor to Sundaram Finance & Royal Sundaram General Insurance.
IMPAL, in its communication to the stock exchanges, said currently it holds 9.98% in Royal Sundaram and it has proposed to divest 2.68% for Rs 101.997 crore, retaining 7.30% of its holding post the divestment. Sundaram Finance, post divestment of 25.90%, will hold 50% in the general insurance company.
Royal Sundaram is among top 10 players in the privately-owned Indian general insurance market with strong positions in motor and health insurance.
The company benefits from extended distribution capabilities with a nationwide network of more than 5,600 agents and 700 branches (consisting of its own branches and that of SFL) and well-established relationships with banks and other distribution partners.
Commenting on the agreement, TT Srinivasaraghavan, MD of Sundaram Finance, said: “Over the past 18 years, Royal Sundaram has built a sterling reputation in the market for its customer service excellence, notably in claims management. The company has demonstrated strong growth in its chosen segments and is witnessing a rapid growth in its profitability. 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.”
Bart De Smet, CEO of Ageas, said: “Partnering with Sundaram Finance offers us a great opportunity to benefit from the potential of what is one of the world’s largest economies with an insurance industry that is expected to grow significantly in the coming years. 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’s 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.”