Battery maker Exide industries, the largest stakeholder in ING Vysya Life Insurance, is set to take full control of the company.
The Rajan Raheja-led company, which currently owns a 50% stake, has decided to acquire the remaining stake for `550 crore.
It will buy 26% stake from Dutch partner ING Insurance International, which is exiting the insurance business in India with this deal. It will also acquire 16.32% stake from Hemendra Kothari group and 7.68% from Enam group.
The deal will value ING Vysya at Rs1,100 crore.
Incidentally, Exide’s current 50% equity stake in the insurance arm is valued at Rs744.43 crore.
As per a BSE announcement, Exide will be scouting for foreign partners to dilute stake up to 26% if required.
“Post such acquisition, Exide has in principle decided to identify and induct a new international player in the life insurance genre to infuse fresh equity into ING Vysya Life (subject to regulatory approvals) for company’s expansion plans,” said the release.
A spokesperson for Exide Industries declined to give further details, while ING Vysya spokespersons were not available for comment.
ING International’s plan for an exit from the Indian joint venture partnership is part of the previously announced divestment strategy. Talks were on for a long time and it was waiting for regulatory hurdles to be cleared.
According to sources, Japanese and Korean insurance giants such as Samsung Life and Hitatchi will be eyeing Indian partnerships. Recently, Samsung Life was in talks with DHFL for a joint venture partnership.
“Since the deliberations on that did not yield any result, Samsung Life can be the most likely partner,” said an industry official.
ING Vysya had managed to get only under 2% market share after it started operations in 2001. Initially, the JV partnership was between ING Vysya Bank and GMR Industries. In 2005, GMR Industries had sold its stake to Exide.
For the industry a whole, life insurance business has been posting de-growth in terms of new business premium for the last few quarters. During April-November last year, ING Vysya posted a growth of 13%, mopping up `387 crore new business premium as against `342 crore in the corresponding period last year.
The company sells policies in 229 cities with 35,000 agents.
The life insurance industry has seen several strategic deals in stake dilution over the last few years. In 2011, Nippon entered into a JV partnership with Reliance Life by picking up a 26% stake, valuing the insurance firm at `11,500 crore. Then, following the exit of New York Life from JV partnership with Max, Sumitomo bought 26% stake in Max Insurance, valuing the company at `10,500 crore.
According to sources, Belgian insurance company Ageas plans an exit from the JV partnership with IDBI Federal Life Insurance.