Digital financial services firm One97 Communications, which operates under Paytm brand, on Saturday said it has formed a joint venture general insurance company in which it has committed to invest ₹950 crore over a period of 10 years.
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The proposal to set up joint venture firm Paytm General Insurance Limited (PGIL) was approved by the board on May 20, the company said in a regulatory filing.
Initially, One97 Communications (OCL) will hold a 49% in PGIL while the rest of the 51% stake is to be owned by OCL's managing director Vijay Shekhar Sharma owned and controlled company VSS Holding Private Limited (VHPL).
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Post the investment, Paytm will hold 74% stake in PGIL, reducing VHPL's stake in the company to 26%.
"PGIL intends to register for and undertake general insurance business. PGIL is yet to commence its general insurance business, which is presently subject to receipt of certificate of registration from IRDAI (Insurance Regulatory and Development Authority of India)," the filing said.
The decision of Paytm board came after its group firm's transaction into a share purchase agreement to acquire Raheja QBE General Insurance Company Limited did not consummate within stipulated time frame.
Paytm in July 2020 had announced that the company along with its founder Vijay Shekhar Sharma will acquire Mumbai-based private sector general insurance company Raheja QBE.
In its exchange filing, OCL said that it has reappointed Mr. Sharma as its managing director for five years. Madhur Deora, the company's Group CFO and president, has been appointed on its board as a whole-time director for the next five years.