Swiss Re, Zurich Insurance, Gen Re, Blackstone, Apax, Advent, CPPIB, KKR, ADIA, Temasek, PremjiInvest among potential suitors
Some of the world’s largest strategic investors such as Swiss Re, Zurich Insurance, Liberty General and bulge-bracket private equity firms such as Apax, Advent, Blackstone Group, Warburg Pincus and KKR have been approached to buy a 26% stake in SBI General Insurance for around ₹3,400 crore, said people with knowledge of the matter.
Canada Pension Plan Investment Board (CPPIB), sovereign wealth funds such as Abu Dhabi Investment Authority (ADIA) and Temasek as well as existing investors like PremjiInvest have also been approached to buy out Insurance Australia Group (IAG), which is looking to exit its nineyear-old Indian joint venture as part of a larger global realignment.
The biggest Australian general insurer is restructuring its Asia-Pacific operations and has already exited Indonesia, Thailand and Vietnam, said the people cited above. India and Malaysia are next on the agenda. Earlier this month, the Australian company said its first-half profit dropped 9.3%, hurt by claims from the hailstorm that battered Sydney in December. Net profit fell to $500 million in the six months ended December 31, compared with $551 million in the same period a year earlier.
State Bank of India (SBI) had sold a 4% stake in the company to Axis Asset Management Co Ltd and PremjiInvest for ₹482 crore at a ₹12,000-crore valuation in September last year. This was seen as a price discovery exercise ahead of an initial public offer (IPO) that was planned by the end of FY20. SBI’s stake in the venture dropped to 70% following the sale, while IAG continued to own 26%. In December 2016, IAG had expressed its interest in raising the stake to 49% in the next two years. IAG paid ₹542 crore for a 26% stake in the joint venture, which started in 2010.
Non-binding bid submissions started in the first week of this month. IAG has mandated Goldman Sachs to run an official sale process. It’s still not clear if IAG will sell in one shot or in phases but executives said a strategic investor would want the entire 26%.
“Close to 40 potential suitors have been sounded out, including Warren Buffett’s General Reinsurance Corp (Gen Re),” said one of the persons cited above.
Source:- The Economic Times-Mumbai
Date:- 13th Feb,2018- Wednesday