Zurich Insurance To Buy 51% For Rs 4,000 Crore In Kotak General For India Foray

Zurich Insurance Co. will invest approximately Rs 4,051 crore to acquire a 51% stake in Kotak Mahindra General Insurance Co.

The parties have entered into a strategic alliance and the stake acquisition will be done through a combination of fresh growth capital and share purchase, according to an exchange filing by Kotak Mahindra Bank Ltd. on Thursday.

The amount also includes fresh growth capital of up to approximately Rs 1,609 crore. The deal is expected to be completed by June 30, 2024, subject to necessary approvals, the bank said.

After the initial acquisition, the Switzerland-headquartered firm will also acquire an additional 19% stake in the bank's subsidiary within three years.

Through this deal, Kotak Mahindra General Insurance would cease to be the bank's subsidiary, and Zurich will enter India's general insurance market.

Zurich General Insurance, a 150 year old company, is currently active in over 200 countries and territories. Gross written premiums for the first six months of 2023 stood at $13.6 billion, up 1% from last year. The company reported a group business operating profit of $3.7 billion flat compared to a year ago, in the first half of calendar year 2023. Net income after tax for the period stood at $2.5 billion, up 6% year-on-year.

The transaction also values Kotak General Insurance at approximately Rs 7,943 crore on a post-money valuation, it said.

In June, a report by Reuters suggested that early-stage negotiations between parties valued the bank's subsidiary at around $800 million and Zurich expressed its interest in either a minority or majority stake.

Shares of Kotak Mahindra Bank were trading 1.12% higher at Rs 1,743 apiece on the BSE compared to a 0.72% advance in the benchmark Sensex at 10.34 a.m.