Intact and HDI-Gerling Top Contenders to Buy Stake in Reliance General
Deal is likely to be around Rs 1,500 crore. Reliance General has appointed UBS Securities India as the adviser for the deal.
One year ago U.S.A. based Traveler Group was the top contender to buy the stake in Reliance General but recently it dropped this idea.
HDI-Gerling currently has non-life insurance joint venture in India with Magma Fincorp. Magma HDI General Insurance was formed in 2009 but yet it has to launch its products. And if HDI Gerling has to acquire stake in Reliance General than firstly it has to sell its stake in Magma HDI general, as foreign insurer can’t have stake in two insurers that are in same business.
As Last year Insurance Regulatory and Development Authority (IRDA) introduced regulations for amalgamation and transfer of general insurance businesses, it is not difficult for insurers to exit from one insurance joint venture and enter into another.
Reliance General is an arm of Anil Ambani led Reliance Capital. Reliance Capital is selling its stake in its general insurance arm to reduce its debt.
Earlier this, Reliance Capital had sold its stake in Reliance Life and Reliance Asset Management to Japanese company Nippon. And with that money that it had paid-off part of its debt.
Reliance General reported a loss of Rs 250 crore in the last quarter of FY’12 on account of third party motor claims. In April 2012 Company has underwritten gross premium of Rs 233.36 crore.