Bajaj Group to buy 26% each in insurance businesses from Allianz

Mumbai: The Bajaj Group will buy out Allianz SE’s stakes in their two insurance joint ventures for a total of ₹24,180 crore, marking the end of its 24-year partnership with the world’s largest insurer.

In a late-night statement, Sanjiv Bajaj-led Bajaj Finserv said the company and other promoter firms will acquire the stakes of the German insurer in Bajaj Allianz General Insurance Co. and Bajaj Allianz Life Insurance Co. for ₹13,780 crore and ₹10,400 crore respectively. Currently, Allianz owns 26% stake in both companies while Bajaj holds the rest.

“The execution of the share purchase agreements (SPAs) mark the culmination of constructive and amicable discussions to ensure a seamless transfer of the stake of Allianz,” Bajaj Finserv said.

Once the deal is concluded, the Bajaj Group’s ownership in both insurance companies will increase to 100%. The acquisition is subject to approvals from regulators including the Competition Commission of India and the Insurance Regulatory and Development Authority of India, Bajaj Finserv said.

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The company said Bajaj Holdings and Investment Ltd and Jamnalal Sons Pvt. Ltd, will participate in the share purchase. Under the agreement, Bajaj Finserv will acquire about 1.01%, Bajaj Holdings and Investment about 19.95% and Jamnalal Sons about 5.04%, aggregating to 26% in each of the insurance companies.

To be sure, most of the Allianz stake will be purchased by other promoter entities. Post-acquisition, Bajaj Finserv’s stake will be 75.01% in both companies.

Bajaj Finserv said its board has also approved acquisition of the entire equity stake held by Allianz in Bajaj Allianz Financial Distributors Ltd, a 50:50 joint venture. Therefore, Bajaj Finserv would acquire 1.2 million equity shares of face value of ₹10 each in the joint venture for up to ₹12.5 crore from Allianz.

In a separate statement, Allianz said that India continues to be one of its growth markets, and it will explore new opportunities that strengthen its position in the market and expand its potential to “serve not only as an investor but also as an operator”.

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“As the proceeds become available, Allianz will consider options for their deployment that support the company’s strategic ambitions, in particular the reinvestment of sale proceeds into potential new opportunities in India,” Allianz said in a statement.

Mint reported in October that Allianz was in early discussions to exit its long-standing joint ventures (JVs) with Bajaj Finserv after battling with the Indian insurance company to increase its stake in these ventures.

“Allianz has indicated to Bajaj that given its strategic priorities, it is actively considering an exit from the life and general insurance joint ventures,” Bajaj Finserv told the exchanges in October, adding that Allianz has said it remains “committed to the Indian insurance market”.

Referring to its regulatory filing from October, Bajaj Finserv said on Monday that after preliminary discussions, the company and Allianz engaged in further discussions.

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“Allianz SE has now expressed their intent to exit the insurance joint ventures and has offered to sell their entire holdings aggregating to 26% equity stake in each of the insurance joint ventures to the Bajaj group.”

Per the Mint report cited earlier, while Allianz said the growth of the JVs so far has exceeded its expectations, it was keen to increase its stake in the companies as it felt recent regulatory changes present better opportunities in the Indian market. However, the Bajaj Group has been reluctant to dilute its stake and wants to continue to hold majority stakes in both companies.