Ergo, Manulife in talks to acquire stake in IndiaFirst2 min read . Updated: 15 Jan 2018, 01:30 AM IST
UK's Legal & General Group plans to sell its 26% stake in IndiaFirst Life Insurance, and has hired investment bank Ambit Corporate Finance to find a buyer for it
Mumbai: Global insurance firms Ergo International AG and Manulife Financial Corp. have started separate discussions to acquire a 26% stake in IndiaFirst Life Insurance Co. Ltd, according to two people aware of the development.
UK’s Legal & General Group Plc plans to sell its 26% stake in IndiaFirst Life Insurance, and has hired investment bank Ambit Corporate Finance Pvt. Ltd to find a buyer for it.
IndiaFirst Life Insurance is a joint venture between Bank of Baroda, which owns 44% stake, Andhra Bank, which holds 30%, and Legal & General.
“The discussions are at initial stages and no conclusions were made over the valuation of the insurance firm," said one of the two people on condition of anonymity. None of the other investors plan to sell their stakes in the insurer, he added.
“We have committed partners who are participative and supportive at the board. The shareholders are happy with the retail growth rate of 80% YoY (year-on-year) and are involved in the business. IndiaFirst Life cannot comment on any rumors or speculations in the market about shareholders," said R.M. Vishakha, managing director and chief executive, IndiaFirst Life Insurance Co. Ltd.
A Legal & General Group Plc spokesperson declined to comment. Mails sent to Manulife and Ergo did not elicit any responses till press time. Ergo already has a presence in India through its joint venture—HDFC ERGO General Insurance Co. Ltd. Toronto-based Manulife had over $806 billion in assets under management and administration, as of 30 September 2017, according to a company statement.
If the deal materialises, it will make the entry for Manulife in India. Manulife with its principal operations in Asia, Canada and the US has presence in all top markets in Asia—China, Hong Kong, Japan, Singapore, Indonesia and Vietnam.
“The life insurance sector has high growth potential across the three large opportunities—channelising long-term household savings, providing protection and leveraging customer base of affinity groups (banks, retail, telecom)," said Shashwat Sharma, partner and head, insurance, KPMG, in India. “As over 90% of India’s workforce is either self- employed or in the informal sector, the life insurance companies have a unique opportunity to penetrate in the protection space which is currently highly under-served and untapped in India."
Last year had seen the listing of two life insurance companies—SBI Life Insurance Co. Ltd and HDFC Standard Life Insurance Co. Ltd.
Four IPOs among the largest IPOs which hit the market last year were from the insurance sector, showing the investors’ interest in the sector.
Last year witnessed four $1 billion plus IPOs—General Insurance Corp. of India (Rs11,175 crore), The New India Assurance Co. Ltd (Rs9,466.9 crore), HDFC Standard Life Insurance Co. Ltd (Rs8,695 crore) and SBI Life Insurance Co. Ltd (Rs8,364 crore).