Sun Life Financial will increase its stake in Birla Sun Life Insurance (BSLI) from 26% to 49% for Rs 1,664 crore. The insurer, which is a joint venture between Aditya Birla Nuvo (74%) and Sun Life Financial (26%), has been valued at Rs 7,235 crore.
Aditya Birla Nuvo, which is a part of Aditya Birla Group, in a statement today said that the additional 23% stake purchase will be subject to requisite approvals. The Insurance Laws (Amendment) Act passed in February 2015 allowed foreign partners to hike their stake in Indian insurance companies to up to 49% from 26%.
Kumar Mangalam Birla, Chairman, Aditya Birla Nuvo and Birla Sun Life Insurance said: "Financial Services is one of our fastest growing businesses and is among our core businesses. I am confident that this move will only strengthen our long standing partnership and help us realise our vision of being a top three private life insurer in India."
Aditya Birla Nuvo has entered into an agreement with the Canadian insurance major Sun Life to sell approximately 437 million equity shares constituting 23% of the issued and paid up equity share capital of the life insurance company. On completion of the transaction, Sun Life’s stake in BSLI will increase from current 26% to 49% while Aditya Birla Nuvo will continue to hold the controlling stake at 51%.
Dean Connor, President and Chief Executive Officer, Sun Life Financial said: "Increasing our ownership position in BSLI, one of India’s leading private life insurers, in partnership with a well respected partner in Aditya Birla Group, in the world’s second most populous country with strong growth prospects, is exactly on strategy and supports our aspirations for Sun Life Asia as one of our four pillars of growth.”
Birla Sun Life had a new business premium market share of 7.9% for the half year ended for September 30, 2015. It posted profit after tax of Rs 40.09 crore for the quarter ended September 30, 2015 compared to profit after tax of Rs 97.34 crore posted in same quarter previous fiscal, according to its public disclosures.
Data from the Life Insurance Council showed that BSLI had collected new premiums of Rs 1,076.61 crores for April 1-October 31 period of this fiscal, compared to Rs 825.65 crore collected in same quarter previous fiscal. This was a growth of 30% and was among the few insurers to also a growth in number of policies.
Ajay Srinivasan, Chief Executive – Financial Services, Aditya Birla Group, said they have a long standing relationship with Sun Life Financial for two of our key businesses, life insurance and asset management. "We are happy to now further strengthen this mutually beneficial relationship,” he added.
The transaction is expected to close by the end of FY16, subject to the customary closing conditions and the requisite statutory and regulatory approvals in India and Canada. Approval from Foreign Investment Promotion Board, Competition Commission of India and Insurance Regulatory and Development Authority of India.
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