Mumbai: Fairfax Financial Holdings Ltd, Warburg Pincus LLC and General Atlantic LLC have joined the race to buy Legal and General Group Plc’s 26% stake in IndiaFirst Life Insurance Co. Ltd, two people aware of the development said.

IndiaFirst is a joint venture between Bank of Baroda Ltd, which owns a 44% stake, Andhra Bank, which holds 30%, and Legal and General.

Legal and General has hired investment bank Ambit Corporate Finance Pvt. Ltd to find a buyer. “The bids are in from various players such as Canadian and US financial institutions, and no decisions have been made yet," said one of the two people on condition of anonymity.

On 15 January, Mint reported that Ergo International AG and Manulife Financial Corp. have begun separate discussions to buy the stake.

Warburg Pincus, General Atlantic and Ambit spokespersons declined to comment while mails sent to Legal and General and Fairfax were not answered till press time.

“India is clearly an attractive market, given its low insurance penetration, propensity to save, increasing middle class and the lack of any formal social security. Hence, heightened interest is a given," said Abizer Diwanji, partner and national leader- financial services, Ernst & Young LLP.

Toronto-based Manulife has more than $806 billion in assets under management and a presence in all top markets in Asia—China, Hong Kong, Japan, Singapore, Indonesia and Vietnam. Ergo already has a presence in India through its joint venture—HDFC Ergo General Insurance Co. Ltd.

Canadian billionaire Prem Watsa’s Fairfax already owns a 22% stake in ICICI Lombard General Insurance Co Ltd. Last year, Fairfax sold a 12.18% stake in ICICI Lombard to private equity firms Warburg Pincus, Clermont Group and IIFL Special Opportunities Fund in a deal worth Rs2,372.5 crore (approximately $383 million), which valued the company at Rs20,300 crore. ICICI Lombard is a joint venture between ICICI Bank Ltd and Fairfax Financial Holdings Ltd.

Last year, Fairfax had backed insurance start-up Digit Insurance, founded by former Allianz executive Kamesh Goyal.

Warburg has invested in Indian NBFCs such as AU Financiers and Capital First Ltd. US-based General Atlantic’s Indian financial services portfolio includes online payment gateway solution provider Billdesk, PNB Housing Finance Ltd, IIFL Wealth Management Ltd and National Stock Exchange.

“Investors look for a good franchise, distribution and even if businesses less scaled but with better persistency ratios, to build a better franchise. A key deterrent has been insurance laws, which do not allow control by foreign firms. This has led to firms not being able to leverage internationally proven distribution and underwriting capabilities," Diwanji added.

The successful listing of leading insurance firms have brought the sector on the radar of global investors. Last year saw the listing of two life insurance firms—SBI Life Insurance Co. Ltd and HDFC Standard Life Insurance Co. Ltd. The Rs8,364 crore IPO of SBI Life Insurance was subscribed 3.57 times.

Last year saw four $1 billion plus insurance IPOs—General Insurance Corp. of India (Rs11,175 crore), New India Assurance Co. Ltd (Rs9,466.9 crore), HDFC Standard Life Insurance Co. Ltd (Rs8,695 crore) and SBI Life Insurance Co. Ltd.

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