Zurich Insurance Company Ltd is picking up a 51 per cent stake in Kotak General Insurance for Rs 4,051 crore.
Zurich Insurance will purchase an additional 19 per cent stake within three years from its initial acquisition.
The proposed transaction values Kotak General at Rs 7,943 crore on a post money valuation, subject to customary closing adjustments.
The expected date of completion of the transaction — 51 per cent sale — is June 30, 2024, subject to customary conditions including approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Competition Commission of India (CCI).
Kotak Mahindra Bank said its insurance arm would cease to be its subsidiary
once Zurich Insurance takes the majority stake.
Kotak General had posted a gross written premium of Rs 1,148.30 crore in 2022-23. Its net worth during the period was over Rs 341 crore.
“India is one of the world’s most important markets with immense potential, and we are pleased to be making a significant commitment with an excellent partner,” Tulsi Naidu, Zurich’s chief executive for Asia Pacific, said.
“The combined expertise and resources of the respective firms will enable us to provide innovative solutions to meet the evolving needs of our customers,” Kotak General’s managing director and chief executive Dipak Gupta said.
The Kotak Mahindra group’s physical and digital distribution strength and Zurich’s global capabilities in digital assets and both B2C (business-to-consumer) and B2B (business-to-business) formats will benefit the company, Gupta said.
“This development is just a matter of getting access to India, one of the key growth markets,” Emkay Global analyst Avinash Singh told Reuters. “To start from scratch, it would have taken much longer to build a brand visibility.”
“While Kotak General is not among the top players in the sector, the Kotak brand as such will give Zurich a good headstart,” he said.
Kotak General Insurance competes with larger rivals HDFC ERGO and Bajaj Allianz, which also count foreign insurers as investors.
Shares of Kotak Mahindra Bank eked out small gains to close at Rs 1,737, a rise of 0.77 per cent over the last close.
Kotak Mahindra General Insurance company’s chairman Gaurang Shah said the company has created a multi-product franchise with strong fundamental building blocks.
For the three months ended September 2023, the insurance company’s loss narrowed to Rs 7 crore from Rs 17 crore in the year-ago period.