Bajaj to Buy Out Allianz’s Stakes in Insurance Joint Ventures
In a significant move for the Indian insurance sector, the Bajaj Group is set to acquire Allianz’s 26% stakes in their life and non-life insurance ventures. This acquisition, valued at Rs 24,180 crore, will make both insurers fully Indian-owned, effectively ending a 24-year partnership.
After the acquisition, Bajaj Finserv’s stake in these firms will increase to over 75%. This strategic shift allows both companies to pursue independent insurance strategies within India, potentially enhancing shareholder value.
Deal Details and Ownership Structure
The deal involves Bajaj Finserv acquiring approximately 1%, Bajaj Holdings and Investment nearly 20%, and Jamnalal Sons 5%, summing up to the full 26% stake in each company. Once the joint ventures are terminated, both Bajaj and Allianz will proceed with their individual insurance plans in the Indian market. The transaction underscores a major consolidation in the Indian financial landscape.
Market Share and Strategic Implications
Bajaj Allianz Life holds a market share of about 3% in terms of premium, while the non-life venture accounts for 7% as of February. Sanjiv Bajaj, chairman and MD of Bajaj Finserv, highlighted that the combined premium of the two companies exceeds Rs 40,000 crore. He also emphasized that full ownership would help in driving greater value for shareholders.
Despite the availability of relaxed FDI limits, Allianz chose not to increase its stake. This decision followed a disagreement with Bajaj over an earlier plan to raise the stake within a 15-year timeframe. Bajaj Holdings & Investment, established after the demerger of Bajaj Auto in 2007, is an investment company with stakes in various Bajaj Group entities. The Bajaj Group was founded by Jamnalal Bajaj in 1926 and operates separately from Jamnalal Sons, which is also involved in this agreement.
