Warburg Pincus to Double Returns from SBI General Insurance Investment
Global private equity firm Warburg Pincus is planning to sell its 10% stake in SBI General Insurance in a deal that could more than double the value of its six-year-old investment. The sale is expected to fetch around $350 million, according to sources familiar with the development.
In 2019, Warburg Pincus and Premji Invest acquired a 26% stake in SBI General Insurance for $432.38 million, valuing the insurer at $1.66 billion. The stake was purchased from Insurance Australia Group Ltd, which had formed SBI General Insurance as a joint venture with State Bank of India (SBI) in 2010. SBI currently owns about 69% of SBI General Insurance, while Napean Opportunities Llp, an entity owned by Premji Invest, holds around 15.8%, and Honey Wheat Investment Ltd, a Warburg Pincus vehicle, owns approximately 9.9%.
The potential sale is timed before SBI General Insurance’s planned Initial Public Offering (IPO) next year. “The investor has been around for more than six years and now they are looking to exit,” said one of the sources. “(SBI General Insurance) plans an IPO later next year and Warburg is looking to exit via a stake sale before that.”
SBI General Insurance has shown strong performance, with gross direct premiums reaching ₹6,586 crore by September 2024, up from ₹5,691 crore the previous year. The company’s profit after tax improved significantly to ₹414 crore in the first half of 2024-25 from ₹60 crore in the corresponding period the previous year.
The Indian non-life insurance sector has seen significant growth, with premium income increasing by 19.5% year-on-year to ₹1,14,972 crore ($13.8 billion) in 2023-24, driven by strong demand for health and motor policies. This growth has made the sector attractive to long-term investors like private equity firms.
“Globally, private equity investments in the insurance sector have been rising,” said Sudip Mahapatra, partner at law firm S&R Associates. “Funds see an opportunity in value accretion through operational enhancements, such as the use of AI and expansion of distribution. For insurers, private capital allows them to expand products and distribution.”
Warburg Pincus, active in India for over two decades, has invested around $10 billion in the country. India accounts for over 10% of the firm’s global investments. The company has recently sold stakes in other portfolio companies such as CarTrade, Kalyan Jewellers, and MedPlus Health Services.
The potential exit by Warburg Pincus comes amid other significant developments in India’s insurance sector. Bajaj Finserv recently acquired German insurer Allianz SE’s 26% stake in Bajaj Allianz General Insurance Co. Ltd and Bajaj Allianz Life Insurance Co. Ltd for ₹24,180 crore, ending a 24-year partnership. Piramal Enterprises Ltd is also planning to sell its stake in Shriram Group’s insurance ventures for ₹4,000-5,000 crore.
