Paytm, along with Vijay Shekhar Sharma, will acquire Raheja QBE, a Mumbai-based general insurance company. Currently, Prism Johnson has a 51% stake in the insurance company and remaining 49% is held by QBE Australia. Prism Johnson in an exchange filing on Monday said its board of directors had approved divestment of 51% in Raheja QBE for an aggregate consideration of Rs 289.68 crore. Industry officials said overall value of the entire deal would be around Rs 568 crore.
Paytm in its release said the strategic acquisition will be through QorQl, a technology company with majority shareholding with Vijay Shekhar Sharma and the remaining held by Paytm. The acquisition would be subject to customary conditions, including approval from the Irdai.
Paytm is set to acquire both stake and will own 100% of the company, and all employees of Raheja QBE will continue working in Mumbai and other locations.
Amit Nayyar, president at Paytm said, “It is an important milestone in Paytm’s financial services journey, and we are very excited to welcome Raheja QBE General Insurance into the Paytm family. Its strong management team will help us accelerate our journey of taking insurance to the large population of India with the aim to create a tech-driven, multi-channel general insurance company with innovative and affordable insurance products.”
Data from Irdai show that gross direct premium underwritten by Raheja QBE for 2019-20 was Rs 158.12 crore, compared with Rs 115.98 crore in previous financial year, a growth of 36.34%. The market share up to March 2020 was at 0.08%, suggest data from Irdai.
Vijay Aggarwal, managing director, Prism Johnson, said, “We are happy to announce the sale transaction of our entire 51% stake in Raheja QBE General Insurance Company. Our decision to sell our stake in Raheja QBE is in line with our mission to create sustainable shareholder value and will enable us to focus our resources on our core businesses. This move will help the insurance business scale up to new heights by leveraging the large customer base and innovative products offered by Paytm.”
Raheja QBE reported a net loss of Rs 62.1 crore for the year ended March 2020, compared with Rs 20.3 crore in the previous financial year.