Kumar Mangalam Birla-controlled diversified business conglomerate Aditya Birla Group is forming a 74:26 JV with South Africa-based MMI Holdings, to expand into health insurance sector. This would mark an expansion in the insurance sector for Birla Group having forayed into life insurance sector in 2010 with Canadian JV partner Sun Life Financial Inc.
Johannesburg-headquartered financial services group MMI Holdings Limited (MMI) said it has entered into a Memorandum of Understanding with Aditya Birla Financial Services Group (ABFSG), the financial services arm of Aditya Birla Group for the JV.
MMI will initially own a 26 per cent stake in the joint venture, being the maximum allowable for a foreign partner in terms of the current Indian foreign direct investment norms. MMI has a right to increase its stake to a maximum of 49 per cent should the Indian regulatory environment be amended in the future.
The regulations are in the process of being relaxed with the ceiling of FDI being raised to 49 per cent.
Nicolaas Kruger, group CEO of MMI, said, “MMI considers India as an important strategic market for its international expansion strategy. ABG is a household name in India and a respected and trusted business group and we are extremely pleased to enter into a partnership with them. MMI believes health insurance is a very attractive entry point into India.”
“Health Insurance has low penetration levels in India. Given ABFSG’s focus on building a retail presence across products, we foresee a huge potential to target the requirements of untapped customers and their families. Our partnership will give us the competitive edge given MMI's expertise in the health insurance sector,” said Ajay Srinivasan, chief executive - financial services, Aditya Birla Group.
FirstRand Bank India, Rand Merchant Bank and Webber Wentzel attorneys serve as advisors to MMI for this initiative.
The other Indian companies in the health insurance sector are Apollo Munich, Max Bupa, Star Health & Allied Insurance and Religare. The fresh entrant is Cigna TTK, a joint venture between US-based Cigna and India's TTK Group.
There are other global companies reportedly looking to enter India's health insurance market including South Africa's Discovery and US-based Aetna Inc and Humana Inc.
Another South African financial services firm Sanlam has an exposure to the insurance market in India through a joint venture with Shriram Group.
MMI is a South Africa-based financial services group listed on the Johannesburg Stock Exchange. It was formed from the merger of Metropolitan and Momentum, sizable insurance-based financial services players in South Africa.
The core businesses of MMI are long- and short-term insurance, asset management, savings, investment, healthcare administration, health risk management, employee benefits, and rewards programmes. MMI conducts its business through operating brands Metropolitan, Momentum, Guardrisk and Eris Properties.
(Edited by Joby Puthuparampil Johnson)
