Zurich to buy 51% in Kotak gen insurance for ₹4,051 cr

The Swiss insurer will buy new and existing shares of the Indian insurer from its parent Kotak Mahindra Bank for ₹4,051 crore, a joint statement said. Zurich will also purchase 30% more in the insurer over the next three years.

The additional stake purchase will help Kotak Mahindra Bank comply with a regulation that mandates banks to limit their stakeholding in insurance companies below 30% or maintain it above 51%.

The deal will value the insurer at a pre-money valuation of ₹6,000 crore, said Jaimin Bhatt, chief financial officer of Kotak Mahindra Bank. “The exact number of how much is primary and how much is secondary will be determined only at closing (of the transaction). Primary infusion is expected to be about ₹1,600 crore. We will arrive at the exact figure only at the time of closing the deal. As of now, the company is being valued at approximately ₹6,300 crore pre-money,” Bhatt said in an interview.

Kotak Mahindra General Insurance, which offers non-life products such as motor, health and home insurance, will use the fresh funds to expand and scale up the business.

“Kotak Mahindra Group’s pan-India ‘phygital’ distribution presence and Zurich’s distinct global capabilities in digital assets, B2B and B2C formats has potential to create a transformational ‘digical’ impact for the Kotak General Insurance franchise delivering innovation efficiently and rapidly in the Indian general insurance space,” Dipak Gupta, managing director and CEO of Kotak Mahindra Bank Ltd, said in a statement.

According to an October report by India Brand Equity Foundation, between April 2021 and March 2022, gross premiums written by non-life insurers reached ₹2.2 1 trillion ($28.14 billion), an increase of 11.1% over the same period in FY21.

“India is one of the world’s most important markets with immense potential. With Kotak Mahindra group’s high-quality franchise and expertise in Indian financial services and Zurich’s deep distribution experience and class-leading capabilities in retail and commercial insurance, we are confident this partnership can bring strong innovation, know-how, and excellent customer experiences to the Indian general insurance market,” said Tulsi Naidu, CEO Asia Pacific, Zurich Insurance Co. Ltd.

The transaction is subject to regulatory approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India, and the Competition Commission of India.

Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Updated: 02 Nov 2023, 11:24 PM IST