ICICI Lombard General Insurance Company Ltd has agreed to acquire Bharti AXA General Insurance Company Ltd via an all-stock transaction that will consolidate its position as India’s third-largest non-life insurer.
The combined entity will have a market share of about 8.7% with annual premium of Rs 16,447 crore, the Mumbai-listed unit of ICICI Bank said in a statement.
As per the deal, ICICI Lombard will issue 1.82 crore shares to Bharti Enterprises, which owns 51% of Bharti AXA, and 1.75 crore shares to French insurer AXA Group, which holds 49% of the target company.
This will result in a decline in ICICI Bank’s stake in ICICI Lombard to 48.11% from 51.89% currently. Bharti Enterprises, led by billionaire Sunil Bharti Mittal, will own about 3.7% in the combined company while AXA will hold 3.6%, back-of-the-envelope calculations show. Institutional investors and other public shareholders will own rest of the stake.
ICICI Lombard said the transaction will augment its distribution strength and help it benefit from partnerships with Bharti Enterprises, the parent of telecom operator Bharti Airtel Ltd, and multinational insurer AXA.
Bharti AXA General Insurance began operations in 2008 and now has a pan-India presence through 152 branches. It had a market share of about 1.4% by gross direct premium underwritten for April-July 2020, as per data from the Insurance Regulatory and Development Authority of India. Bharti and AXA also have a life insurance joint venture.
ICICI Lombard had a market share of about 7.8%, just above fourth-ranked Bajaj Allianz General Insurance Company Ltd’s 7.6%. State-run New India Assurance Company Ltd was the largest non-life insurer with a market share of about 16.9%. Another state-run insurer, United India Insurance Company Ltd, was ranked second with a 9.6% share.
The closing of the proposed transaction is subject to various conditions precedent and regulatory approvals.
This is at least the third takeover deal in India’s general insurance segment this year. Last month, digital payments firm Paytm and its founder Vijay Shekhar Sharma agreed to acquire Raheja QBE General Insurance Company Ltd from the Rajan Raheja Group and Australia’s QBE Insurance Group Ltd. In January, Flipkart founder Sachin Bansal’s Navi Technologies Pvt. Ltd took over DHFL General Insurance Ltd from Wadhawan Global Capital.
ICICI Lombard was set up in 2001 after the Indian insurance industry opened up to private players. It started as a joint venture between ICICI Bank and India-born Canadian billionaire Prem Watsa’s Fairfax Financial Holdings Ltd.
Fairfax first sold part of its stake in the insurer in 2017. It divested more stake thereafter and fully exited in October last year, clocking modest returns overall on its 18-year investment. In June last year, private equity firm Warburg Pincus exited ICICI Lombard with a bountiful harvest.
