Aditya Birla Nuvo will continue to hold 51% in the joint venture
Sun Life Financial of Canada will increase its stake in Birla Sun Life Insurance (BSLI), a joint venture with Aditya Birla Nuvo (ABNL), from 26% to 49% at an investment R1,664 crore. The transaction is expected to close by the end of current financial year, subject to the regulatory approvals in India and Canada and customary closing conditions.
Kumar Mangalam Birla, chairman, Aditya Birla Nuvo and BSLI, said, “Financial Services is one of our fastest growing businesses and is among our core businesses. Our life insurance business, BSLI, plays a key role in helping us reach out to mass India and protect their financial future; also helping us drive the financial inclusion agenda”.
BSLI is one of the leading private life insurance players in India, with the new business premium market share of 7.9% for the half year ended September 30, 2015.
ABNL has entered into an agreement with Canadian insurance major Sun Life to sell approximately 437 million equity shares constituting 23% of the issued and paid-up equity of BSLI. On completion of the transaction, Sun Life’s stake in BSLI will increase from current 26% to 49%. ABNL will continue to hold the controlling stake at 51%, valuing BSLI at R7,235 crore.
Dean Connor, president and chief executive officer, Sun Life Financial, said, “Increasing our ownership position in BSLI, one of India’s leading private life insurers, in partnership with a well-respected partner in Aditya Birla Group, in the world’s second most populous country with strong growth prospects, is exactly on strategy and supports our aspirations for Sun Life Asia as one of our four pillars of growth.”
A number of foreign players, including Axa, Standard Life and Nippon, have announced raising their shareholdings in their respective insurance JVs in India after the government allowed 49% FDI in the sector this year.
On December 1, AXA increased its stake in life and general insurance joint ventures with Bharti Enterprises from 26% to 49% for an undisclosed amount. In November, Nippon Life bought a 23% stake in Reliance Life Insurance, pushing its holding in the company up to 49%.
Standard Life in August announced plans to buy a 9% additional stake in its Indian insurance venture HDFC Life to raise its ownership to 35%, valuing HDFC Life at R18,951.4 crore. The same month, the FIPB approved Tokio Marine’s plan to raise stake in its Indian JV Edelweiss Tokio Life Insurance to 49% from 26%.
British insurer Aviva also announced its plan to raise stake in its Indian joint venture with Dabur Invest Corp to 49%.