Zurich Insurance Company has agreed to acquire a 51% stake in Kotak General Insurance Company Ltd for Rs 4,051 crore ($486.8 million), marking the single-largest investment by a foreign insurer in an Indian non-life insurer.
Zurich will buy the stake through a combination of fresh growth capital of up to Rs 1,609 crore and share purchase, Kotak Mahindra Bank, the Indian insurer's parent, said in a statement Thursday.
Zurich will also acquire an additional stake of 19% within three years from its initial acquisition. India allows foreign companies to own up to 74% of local insurance companies. The limit was raised from 49% in 2021.
The proposed transaction values Kotak General Insurance at about Rs 7,943 crore on a post-money valuation, the bank said.
“Kotak Mahindra Group’s pan-India ‘phygital’ distribution presence and Zurich’s distinct global capabilities in digital assets, B2B and B2C formats has potential to create a transformational ‘digical’ impact for the Kotak General Insurance franchise delivering innovation efficiently and rapidly in the Indian general insurance space,” said Dipak Gupta, MD and CEO, Kotak Mahindra Bank.
Kotak Mahindra General Insurance recorded gross written premium of Rs 1,148.30 crore for the financial year ended on March 31, 2023. Its turnover was 1.7% of Kotak Mahinda Bank’s consolidated total income, according to a disclosure.
The company is one of India's smaller general insurers and has been looking to sell a stake to accelerate growth. The Kotak group is controlled by billionaire Uday Kotak, who recently stepped down as the chief of Kotak Mahindra Bank.
Zurich, headquartered in Switzerland, is a 100% subsidiary of Zurich Insurance Group Ltd, a multi-line insurer that operates in more than 200 countries and territories. Zurich Insurance Group is listed on the SIX Swiss Exchange.
The Swiss company edged out US insurer Chubb to acquire the Kotak unit. Chubb is the world's biggest property and casualty insurer with almost $200 billion in assets. It is present in 54 countries and previously had a joint venture with HDFC for a general insurance company. That JV ended in 2007.
The transaction is subject to customary conditions precedent including regulatory approvals from the Reserve Bank of India, Insurance Regulatory and Development Authority of India, and the Competition Commission of India.