London: Gerry Grimstone, chairman of Standard Life Plc., wears three hats.
Apart from heading the Edinburgh-headquartered asset management group, he is also chairman of Candover Investments Plc., one of Europe’s oldest private equity funds, and the India Champion for the UK’s Financial Services Sector Advisory Board—a coordinator between the two governments.
Investment plans: Grimstone says the firm will make two or three quality investments in India, China and Hong Kong, starting small. Tamal Bandyopadhyay / Mint
Grimstone is on the board of HDFC Standard Life Insurance Co. Ltd, India’s leading private insurance firm in which Standard Life holds a 26% stake. The UK company also holds a 40% stake in HDFC Asset Management Co. Ltd, which has about 10% market share in the Indian mutual fund industry with Rs45,479 crore worth of assets under management in October.
In a recent interview, Grimstone said Standard Life is keen to raise its stake in the insurance company to 49% and the government should allow that as there is a clear distinction between foreign control and foreign financing.
He said the asset management company, or AMC, has certain property assets that have “turned out to be not as good quality as we thought they would be” and the promoters have found a way of removing those assets from the fund to the benefit of the investors. He said he is also keenly looking for opportunities in the private equity space. Edited excerpts:
The Indian government has not yet cleared the Bill to allow foreign players 49% stake in insurance companies. It must be very frustrating for you.
We were the first life (insurance) company to form a joint venture in India. When we formed the joint venture with HDFC, it was conceived as a 50:50 relationship.
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What do you mean by 50:50?HDFC and Standard Life share the business. I look to Deepak (Parekh) for certain insights and aspects of business and he looks to me for certain insights… We are very much in it together. The original agreement between shareholders had envisaged that we would be able to increase our shareholding to 50:50 as and when the law allows. We are very keen to do that.
It makes good sense to have 50:50 economic interests and I see no difficulty with (it) if India for public policy reasons may want to maintain control of these businesses…
I myself cannot understand the difference between 26% and 49%. If we are allowed to raise our stake, the capital burden of the business will be split more fairly between the two promoters and still HDFC can have control with 51%.
Even with a 26% stake, you are offering management expertise. So why do you need to raise your stake to 49%?
My impression is that in India life assurance promoters are now conscious of the capital requirement that a growing life assurance company has and they will find it helpful if their foreign partners assist in maintaining the capital requirement.