Bajaj Finserv Ends Insurance JV With Allianz Group In Rs 21,400-Crore Deal

Bajaj Finserv Ltd. on Thursday ended its 24-year joint venture with German financial services major Allianz SE after acquiring their 23% stake in two insurance subsidiaries for Rs 21,390 crore.

The Bajaj Group bought out Allianz's stake in Bajaj General Insurance and Bajaj Life Insurance for Rs 12,190 crore and Rs 9,200 crore, respectively.

The acquisition takes the ownership of the Mumbai-based conglomerate in both insurance companies to 97% from 74%, giving Bajaj Finserv complete control of the insurance companies with 75% stake, according to a statement.

The transfer of Allianz’s remaining 3% stake is expected to be completed by July through a proposed buyback of shares by the insurance companies, subject to applicable law and necessary approvals.

If the buyback is completed, the stake of Bajaj Finserv is expected to go up to approximately 77.3%, the statement added.

"The acquisition provides us strategic flexibility to access new markets, introduce new products, build scale and advance growth as insurance penetration in India is set to grow exponentially over the next two decades," said Sanjiv Bajaj, chairman and managing director of Bajaj Finserv.

The deal to end the JV with Allianz was announced in March last year. Regulatory approvals were received in four months.

Bajaj Finserv said the acquisition will have no impact on the operations of the insurance companies or the interests of policyholders and business partners. The corporate headquarters of the Bajaj General Insurance and Bajaj Life Insurance will continue to be based in Pune.

The transaction, the largest ever in the Indian insurance sector, also marks one of the most significant acquisitions of a global joint venture partner by an Indian business group.

The government last year relaxed raised foreign direct investment limit in the insurance sector from 74% to 100%, rationalised penalties, and eased regulatory hurdles for intermediaries. It also paved the way for the merger of a non-insurance company with an insurance firm.

India's insurance sector has expanded at an annual rate of 17% over the past two decades and is projected to reach Rs 19.3 lakh crore ($222 billion) by the end of this fiscal, according to a government think tank.