Mumbai Capital

Sun Life to increase stake in Birla JV

Canadian firm Sun Life Financial has decided to increase its stake in its Indian joint venture, Birla Sun Life Insurance to 49 per cent from 26 per cent for Rs 1,664 crore. The deal values the Indian life insurance company at Rs 7,235 crore. The move follows government’s decision to increase foreign direct investment cap in the insurance sector to 49 per cent from 26 per cent.

Close partners

Kumar Mangalam Birla, chairman, Aditya Birla Nuvo, said: “Financial services is one of our fastest growing businesses and is among our core businesses.” Aditya Birla Nuvo (ABNL) is the holding company for Birla Sun Life. “Our life insurance business, Birla Sun Life 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. Both Sun Life and ABNL have closely partnered in building the life insurance business to its current scale, investing heavily in both capital and resources,” Birla said.

Pending approval

The insurance company will now have to apply to the Foreign Investment Promotion Board and Insurance Regulatory & Development Council of India, for their approval.

“The transaction is expected to close by the end of FY2015-16, subject to the customary closing conditions and the requisite statutory and regulatory approvals in India and Canada,” Aditya Birla Nuvo said in a statement.

Birla Sun Life, which has a market share of 7.9% (for the first half of FY15), has 1.6 million policyholders and a distribution reach of 418 cities and 489 branches. The insurers’ first year premium grew by 30 per cent till October to Rs 1,077 crore.

Rise in FDI

A number of foreign insurers have increased their stake in their Indian insurance joint ventures after government allowed higher foreign direct investment. Life insurers such as ICICI Prudential, Bharti Axa, Reliance Life have seen their joint venture partners increasing their stake in recent times.

ICICI Bank recently decided to sell 4 per cent stake in life insurance arm to Premji Investments & its affiliates while another 2 per cent to Compassvale Investment Pte — a wholly-owned subsidiary of Temasek — the Singapore government’s investment vehicle for Rs 1,950 crore.

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Printable version | Jul 31, 2021 10:25:27 PM |

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