Insurance Australia Group Ltd (IAG) on Thursday said it has agreed to sell its entire 26% stake in SBI General Insurance (SBIG) to Warburg Pincus and Premji Invest for $432.38 million.
While Premji Invest has agreed to acquire 16% in the general insurer, Warburg Pincus plans to buy the remaining 10%. The transaction, subject to regulatory approvals, is expected to be completed by 30 June 2020.
“With our sharpened focus on our core territories of Australia and New Zealand, now is the right time for IAG to exit its investment in SBIG," said Peter Harmer, managing director and chief executive officer of IAG. “IAG has enjoyed a strong and successful relationship with State Bank of India since establishing the SBIG joint venture in 2009."
The country’s largest lender, State Bank of India (SBI), will continue to own 70% in its general insurance arm. The remaining 16.01% will be held by Napean Opportunities Llp (an affiliate of Premji Invest) and 9.99% by WP Honey Wheat Investment Ltd, an investment vehicle of Warburg Pincus. Besides, PI Opportunities Fund-1 will hold 2.35% and Axis New Opportunities AIF-I will hold 1.65% stake in the company.
“SBIG has a high-quality management team having an institutional framework with systems and processes in place. This is demonstrated through consistent high growth and positive underwriting results. We extend our heartfelt appreciation to IAG, the outgoing partner, who has progressively collaborated with us in building SBIG to the level where it stands today," said Dinesh Kumar Khara, managing director of global banking and subsidiaries at SBI.
SBI chairman Rajnish Kumar said the bank had dropped a plan to take its general insurance unit public, citing no immediate need for additional capital. India’s largest bank was earlier looking to list SBI General Insurance in fiscal 2021.
In November 2018, SBI sold 4% stake in SBI General Insurance for ₹482 crore (around $66 million) to two alternative investment funds (AIFs)—Axis New Opportunities AIF-I and PI Opportunities Fund-I, an AIF of Premji Invest. The transaction valued SBIG at over ₹ 12,000 crore.
SBI General Insurance sells motor, health, personal accident, travel and home insurance to retail customers and aviation, fire, marine, liability and cyber defence insurance policies in the commercial space. With presence in more than 110 cities across India, the insurer had a market share of 3.24% as of September, among general and stand-alone health insurers.
The insurance sector has seen heightened deal activity .
In September, Mint reported that Life Insurance Corporation of India-owned IDBI Bank planned to sell its 48% stake in IDBI Federal Life Insurance Co.
In February, homegrown private equity firm True North bought a 51% stake in Max Bupa Health Insurance Co. Ltd in an all-cash deal that valued the health insurer at ₹1,001 crore.