By Siddhant Mishra and Joydeep Ghosh

Aditya Birla Capital (ABCL), the holding company of the financial services business of Kumar Mangalam Birla-led Aditya Birla Group, has put its insurance brokerage arm – Aditya Birla Insurance Brokers (ABIBL) – up for sale, said sources close to the development.

Though names of bidders could not be independently verified by FE, industry sources said private equity firm Samara Capital and Aon India Brokers are in the race to acquire it. “Potential bidders are doing the due-diligence process for the past couple of months,” said the source. The deal is expected to go through in the next few months.

Aditya Birla Capital declined to comment for the story.

Sources said while the valuation is being arrived at, the deal could go through between 3.5x and 5x of profits. ABIBL’s FY22 revenues were ₹692 crore and the profit before tax was at ₹86.02 crore, according to the holding company’s annual report. Industry players said the valuation could be around ₹300-400 crore.

Also read: Jio Phone 5G spotted on BIS certification site, launch expected soon

ABIBL provides integrated insurance broking and advisory services to companies and individuals. It also provides re-insurance solutions to insurance companies based in India, South Asia, the West Asia and South-East Asia. It is present in 11 locations across India and has over 350 employees, according to the company website.

According to sources, the new management under CEO Vishakha Mulye is looking to restructure the company and exit some of the businesses where scalability is an issue. ABIBL has been around for almost two decades. However, the company has not been able to significantly scale up the business, said sources. “While its main business is vehicle insurance, the company also gets a lot of captive business from group firms. Scaling such a business is also a problem because of the cut-throat competition in the market, where brokers are willing to do business for even 1-2% of brokerage,” said the source.

ABCL has much bigger businesses in its portfolio that includes a mutual fund house, life insurance and general insurance firms.

At present, Mulye and the management are working on bringing about a lot of synergies, including cross selling and upselling, in the group. New initiatives like One ABCL are in the works. In addition, the group is aggressively focusing on digitisation.

According to its FY22 annual report, ABIBL’s non-life direct premium placement grew 17% year-on-year, from ₹4,718 crore to ₹5,505 crore, as of March 2022. Motor insurance, its main contributor to premium placement, grew 21%. Its market share in direct non-life industry premium increased from 2.37% to 2.49%. Overall premium grew 17% – from ₹4,852 crore to ₹5,687 crore. Revenue rose 16% – from ₹595 crore to ₹693 crore. The profit before tax climbed 22% to ₹86.02 crore from ₹70.70 crore. The profit after tax stood at ₹64.06 crore at the end of FY22.

Also read: Mutual Fund explainer: Minimum SIP and investment duration required to get Rs 10 crore

Aditya Birla Capital’s shares on Tuesday closed down 0.48% at ₹156.3 on the BSE. The firm commands market capitalisation of ₹37,775 crore, with price-to-earnings of 101.84. The scrip has jumped 54.6% since June 1, the day Mulye joined the company as CEO-designate. Since July 1, the day she took charge as the CEO, shares have surged 75%.