Chennai-based Sundaram Finance Ltd (SFL) is acquiring 26 per cent stake in Royal Sundaram Alliance Insurance Company Ltd (RS) from JV partner RSA Group, UK, for Rs 450 crore ($72.4 million), according to a stock market disclosure. The deal is subject to regulatory approvals.
Post this, SFL, along with associates, will have 100 per cent stake in RS.
RS was formed in 2001 as a joint venture between the UK firm and SFL in which SFL held 74 per cent stake along with the associate firms and the remaining 26 per cent was owned by RSA Group. It offers health, car, travel, home, hospital, accident and business insurance services.
Currently, RS has 6.7 million customers, 1,700 employees and distributes its products in over 180 cities in the country. In FY14, the firm reported GWP of Rs 1437 crore.
"RSA has added a lot of value on the technical aspects of the business and been a valued business partner. RSA Group had recently undertaken a review of their businesses globally and decided to exit non-core markets, of which Indian is one. While we are sorry to part company with them, we recognise that this is part of their large global portfolio strategy," said TT Srinivasaraghavan, MD of Sundaram Finance.
"India is entering an exciting phase in its economic journey and the financial services sector, specifically the insurance sector, is poised for significant growth. Given the strong synergy with the parent's auto lending and housing finance businesses, this will further strengthen our presence in the retail financial services space," he added.
RSA is a multinational insurance group and has core operations in the UK, Scandinavia, Canada, Ireland and Latin America. The company focuses on general insurance and employs around 21,000 people.
SFL was founded in 1954 and offers savings products like deposits and mutual funds, car and commercial vehicle finance, insurance, home loans, software solutions, business process outsourcing, tyre finance, fleet cards and logistics services.
Last May, the company offloaded its entire equity holding in Credit Information Bureau India Limited (CIBIL) to the US-based TransUnion International Inc.
Sundaram Finance scrip closed the day at Rs 1,534, down 0.84 per cent on the BSE, in a strong Mumbai market on Wednesday.
(Edited by Joby Puthuparampil Johnson)
