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Sun Life to hike stake in JV with Aditya Birla Group for $250M

02 December, 2015

Canada’s Sun Life Financial Inc will increase its stake in its Indian life insurance joint venture with the Aditya Birla Group for Rs 1,664 crore (about $250 million), joining a raft of companies from the UK to Japan in raising their holdings in local insurers.

Sun Life will raise its stake in Birla Sun Life Insurance to 49 per cent from 26 per cent, Aditya Birla Nuvo Ltd said in a statement.

The stake of Aditya Birla Nuvo, part of the diversified metals-to-telecoms group, will come down to 51 per cent in the JV after the deal completes.

The deal, which is subject to regulatory approvals and customary closing conditions, is expected to close by the end of March 2016.

The insurance sector has been a hotbed of activity after the government allowed foreign companies to hold a 49 per cent stake in Indian insurers from 26 per cent earlier. The move was aimed at attracting long-term capital and improving the overall investment climate.

Indeed, foreign direct investment in the insurance sector has surged to $341.43 million during March-September this year from $135.30 million a year earlier, the Press Trust of India reported citing commerce and industry minister Nirmala Sitharaman as saying in parliament on Wednesday.

Dean Connor, president and CEO of Sun Life, said the deal is part of efforts to make Sun Life Asia one of its four pillars of growth.

Kumar Mangalam Birla, chairman, Aditya Birla Nuvo, said the deal would help realize its aim of being a top three private life insurer in India.

Birla Sun Life started operations in 2001. It has a customer base of 1.6 million individual policyholders and reaches 418 cities through a network of 55,000 advisers.

Joining the bandwagon

British health insurer Bupa Plc, Japan’s Nippon Life and Tokyo Marine, UK insurer Aviva Plc, French firm Axa and Australia’s QBE Group and Insurance Australia Group Ltd are among the companies that have raised or are planning to raise their stake in their Indian insurance JVs.

Bupa Plc has agreed to increase its stake in its joint venture with Max India Ltd to 49 per cent from 26 per cent for about Rs 191 crore ($29 million). The stake of Max India, led by chairman Analjit Singh, will fall to 51 per cent in Max Bupa Health Insurance. 

In September, Nippon Life said it would raise its stake in Reliance Life Insurance from 26 per cent to 49 per cent by buying stake from partner Reliance Capital.

Earlier this week, state-run Allahabad Bank said it was planning to sell all or part of its stake in Universal Sompo General Insurance Co. Ltd. The bank is the largest shareholder in the insurance firm with a 30 per cent stake, while Japan’s Sompo Japan Nipponkoa Insurance Inc has a 26 per cent stake in the JV. 

Australian insurer QBE Group has said it would buy more in Raheja QBE General Insurance Company Ltd.

Previously, UK insurer Aviva Plc said it was planning to increase its stake in Aviva India, its local JV with Dabur Group, to 49 per cent.

Tokyo Marine had sought to raise its holding in Edelweiss Tokio Life Insurance while Axa hiked its stake in its joint venture with Bharti group.

Also, Aegon raised its stake in Aegon Religare Life Insurance to 49 per cent as part of a larger deal where Religare sold its stake in the firm to media house and existing investor Bennett, Coleman & Co. Ltd.

Insurance Australia Group has also said it would increase its stake in a general insurance joint venture with India’s largest lender, State Bank of India, to 49 per cent.


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Sun Life to hike stake in JV with Aditya Birla Group for $250M

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