INSUBCONTINENT EXCLUSIVE:
such as Apax, Advent, Blackstone Group, Warburg Pincus and KKR have been approached to buy a 26 per cent stake in SBI General Insurance for
around Rs 3,400 crore, said people with knowledge of the matter.
Canada Pension Plan Investment Board (CPPIB), sovereign wealth funds such
as Abu Dhabi Investment Authority (ADIA) and Temasek as well as existing investors like PremjiInvest have also been approached to buy out
Insurance Australia Group (IAG), which is looking to exit its nineyear-old Indian joint venture as part of a larger global realignment.
The
biggest Australian general insurer is restructuring its Asia-Pacific operations and has already exited Indonesia, Thailand and Vietnam, said
India and Malaysia are next on the agenda
Earlier this month, the Australian company said its first-half profit dropped 9.3 per cent, hurt by claims from the hailstorm that battered
Net profit fell to $500 million in the six months ended December 31, compared with $551 million in the same period a year earlier.
State
Bank of India (SBI) had sold a 4 per cent stake in the company to Axis Asset Management Co Ltd and PremjiInvest for Rs 482 crore at a Rs
12,000-crore valuation in September last year
This was seen as a price discovery exercise ahead of an initial public offer (IPO) that was planned by the end of FY20
In December 2016, IAG had expressed its interest in raising the stake to 49 per cent in the next two years
IAG paid Rs 542 crore for a 26 per cent stake in the joint venture, which started in 2010.
Non-binding bid submissions started in the first
IAG has mandated Goldman Sachs to run an official sale process
Warburg Pincus and KKR declined to comment
Rs 89 crore in the quarter ended December, up from Rs 58 crore in the year earlier
The firm reported a 150 per cent increase in its annual revenue to Rs 400 crore in FY18
Gross written premium (GWP) revenue grew 36 per cent to Rs 3,545 crore, while assets under management rose to Rs 5,300 crore from Rs 4,360
Return on equity almost doubled from 13.9 per cent in FY17 to 26.5 per cent.
Valuation of general insurance companies is based on gross
written premium, profitability and net worth
In recent listings, investors have given them a multiple of eight times to book and three times gross written premium
crore to Rs 13,000 crore, with a 26 per cent stake worth about Rs 3,380 crore.
Set up in 2010 as a 74:26 joint venture between SBI and IAG,
SBI General offers retail and commercial general insurance products
Its offerings include motor, health, personal accident, travel and home insurance in the retail space and aviation, fire, marine,
construction, engineering and liability insurance in the commercial space with a leading market share in fire and personal accidental
It currently has a presence through 23,000 branches of the State Bank Group and over 5,500 regional rural banks
In the first half of FY19, it moved up a notch to seventh position in terms of gross written premium at Rs 2,067 crore, up from Rs 1,593
The domestic life insurance industry registered 11 per cent year-on-year growth in new business premiums in FY18, generating revenue of $30
Non-life premiums rose 17.5 per cent.
For strategic investors like Swiss Re, Zurich and Gen Re, an investment will give them a firm footing
Gen Re received a licence to open an India office in 2017, as did Swiss Re, which has been exploring a firm entry into the market.
Private
equity funds have also taken large bets on insurance
KKR is an investor in SBI Life, while Blackstone has made an attempt to buy Star Health and Allied Insurance
The 2019 outlook is positive, as comparisons will ease; we expect industry new sales growth in the high single digits or low double digits,
