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Sells 26% In ING Vysya Life Insurance To JV Partner Exide
Mumbai: Dutch financial ser vices group ING has exited its insurance business in India selling its 26% stake in ING Vysya Life Insurance to its joint venture partner Exide Industries in a deal that val ued the company at Rs 1,100 crore. Exide is now looking for a foreign insurer who will buy the 26% stake.
Although a minority sha reholder, holding the maxi mum permissible 26% stake ING group controlled the life insurance operations for over a decade even as Indian share holding changed several hands. A statement issued from Amsterdam said that ING's exit from the Indian life insurance joint venture is part of the previously an nounced intended divestment of ING's Asian Insurance and Investment Management businesses. "The process for the remaining businesses is ongoing. Any further announ cements will be made if and when appropriate. Subject to regulatory approvals, the transaction is expected to close in the first half of 2013," said the statement.
The valuation of the deal has surprised industry in siders. "Prima facie a valua tion of Rs 1,100 crore seems to be less considering that this is a 10-year old company where the promoters have invested more than Rs 1,000 crore," said an industry official.
Industry officials also feel that the coordinated exit of fi nancial investors gives an im pression that these were structured investments where returns are not entire ly market linked. However, in dustry persons also point out that in an exit deal the Indian partner is on a strong footing as partners have the right of first refusal.
In a statement to the stock exchanges, Exide Industries said: "The company, current ly owner of 50% of the equity capital of ING Vysya Life In surance (IVL), has in-princi ple decided to acquire the re maining 50% of the equity capital of IVL (26% from ING group, 16.32% from the He mendra Kothari group and 7.68% from the Enam group) for an aggregate considera tion of Rs. 550 crore approxi mately, subject to regulatory approvals."
Hemendra Kothari and Enam had picked up stakes in the company as financial in vestors in recent years.
ING is the third insurer to exit India after the opening up of the sector. Australian insurer AMP in a joint venture with Sanmar was the first to sell out to Reliance Life Insurance. Some years later American insurer Chubb exited its joint venture with HDFC following disagreement with its partner who later tied up with Ergo. Last year US insurer New York Life sold its stake in Max New York Life to Max which later sold its stake to Ja pan's Mitsui. Following the global financial crisis, several insurers have tempered their expansion plans. At present North American insurer Manulife and Samsung Life of Canada are actively pursuing a presence in India.
ING, which has a presence in banking, will continue to retain its presence. "Today's agreement does not impact ING Vysya Bank, a publicly listed Indian bank in which ING has a 44% stake, nor ING's fund management busi ness in the country," the state ment added.
Automotive battery manu facturer Exide is a Rajan Ra heja group company and has a market capitalisation of over Rs 10,000 crore. The company got into the life insurance business by buying out GMR group. GMR group, which along with Vysya Bank, was the original partner of ING had acquired a majority stake after ING acquired controll ing stake in Vysya Bank.
Vysya Bank had gradually diluted stake in favour of GMR to avoid falling foul of regulation which did not permit foreign partners holding 26% to invest in their joint venture partners.
Of the 24 life insurance players in the country, two companies— Life Insurance Corporation (LIC) and Sahara India Life Insurance Co—are running the business without foreign partners.
PRESSING THE EXIT BUTTON
2001 | ING ties up with Vysya Bank and GMR to promote a life company
2002 | ING Group gains full control of Vysya Bank, which sells part stake in life insurer to GMR
äGMR hikes stake; Enam comes in as a fi nancial investor
2005 | Gujarat Ambuja Cements buys out ING Vysya Bank's entire 14.87% in the life insurance entity for 61cr äGMR exits ING Vysya Life, sells its 50% stake to Exide for 203cr
2010 | Hemendra Kothari buys Gujarat Ambuja's 12% stake 2013 | Exide acquires remaining stake, including ING's 26%, Kothari's 16.32%, Enam's 7.38% in a deal valuing insurer around 1,100cr
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