ICICI Venture, Morgan Stanley, Poonawalla invest Rs 525 cr in Magma HDI insurance

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Updated: Mar 17, 2021 8:39 AM

ICICI Venture and Morgan Stanley Private Equity Asia along with the Cyza Chem (a Poonawalla Group company) and two family offices are investing Rs 525 crore in Magma HDI General Insurance, a joint venture between Magma Fincorp and HDI Global SE, Germany.

investmentIndeed, the near-term premiums surged above 10% pa both in late March 2020 and 2021.

ICICI Venture and Morgan Stanley Private Equity Asia along with the Cyza Chem (a Poonawalla Group company) and two family offices are investing Rs 525 crore in Magma HDI General Insurance, a joint venture between Magma Fincorp and HDI Global SE, Germany.

Magma HDI on Tuesday announced the transaction of Rs 525 crore that included a primary capital raise of Rs 250 crore and secondary sale of Rs 275 crore. This investment would further increase the Poonawalla group’s direct stake in the insurance arm of Magma. Serum Institute CEO Adar Poonawalla owned Rising Sun Holdings has already acquired a controlling stake in the NBFC, Magma Fincorp, in February this year.

The secondary sale of Rs 275 crore would enable Magma Fincorp and its group companies to comply with the Reserve Bank of India’s guidelines for ownership of stake in insurance companies, while the fresh capital infusion of Rs 250 crore would be providing growth capital to meet the needs of the expanding distribution capabilities, a company statement said.

Adar Poonawalla, CEO, Serum Institute of India, said they saw huge potential in the growth of Magma HDI which is a young and fast growing company and it could reach its full potential in next few years.

Magma HDI General Insurance has reported a CAGR of 45% in the last three years. The company’s solvency stood at 1.81 times as on December 31, 2020, against the required regulatory solvency of 1.5 times. For the 9MFY21 period ending December 2020, the company recorded a profit after tax of Rs 22.3 crore on a gross written premium of Rs 911.2 crore. As of Dec’20, the investment book stood at Rs 2,881 crore.

Rajive Kumaraswami, Managing Director & CEO, Magma HDI General Insurance said the growth capital that investors brought on board would enable the company to expand the business and explore new opportunities. Sanjay Chamria, Vice Chairman & Managing Director, Magma Fincorp said the with the induction of high quality investors and direct and indirect capital infusion by Poonawalla group, the company would carve out a niche for itself in the general insurance industry.

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