Apax Partners, Carlyle Group may bid for stake in Royal Sundaram

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Mumbai: Apax Partners and Carlyle Group LP are among suitors weighing bids for a stake in Indian insurer Royal Sundaram General Insurance Co., people familiar with the matter said.

Royal Sundaram, a unit of Mumbai-listed Sundaram Finance Ltd., has started a process to sell a 49% stake, according to the people. Any deal could fetch about $500 million, the people said, asking not to be identified because the information is private. The insurer has also drawn interest from other foreign private equity firms, the people said.

The September share sale of ICICI Lombard General Insurance Co., which made it the first publicly traded general insurer in the country, set a valuation benchmark that local rivals can reference as they pursue deals. Royal Sundaram is one of the few general insurers in India that doesn’t have a foreign shareholder.

Any deal will add to the $12.2 billion of acquisitions announced in the Indian financial industry this year, data compiled by Bloomberg show. Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, the people said.

Representatives for Apax, Carlyle and Royal Sundaram declined to comment.

Shares of Sundaram Finance have risen 63% in Mumbai trading this year through Tuesday, giving the company a market value of about $3.2 billion. Sundaram Finance, led by managing director T. T. Srinivasaraghavan, earned about 39% of its revenue and 6.7% of its pretax income from insurance in the year ended March, data compiled by Bloomberg show. It also runs operations including asset management, home loans and commercial vehicle finance.

Sundaram Finance owns 75.9% of Royal Sundaram, while the remainder is held by other Indian shareholders, according to its website. It was previously a joint venture with the UK’s Royal & Sun Alliance Insurance Plc.

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