Exide Industries Ltd (EIL), India’s largest producer of automotive and industrial batteries, which holds 50% of the equity capital of ING Vysya Life Insurance Company Limited (IVL), has decided to acquire the remaining 50% of the equity capital of IVL. With this acquisition, ING Group will exit its insurance business in India as part of its global restructuring strategy.
Prior to the exit from India, ING exited its insurance ventures in Malaysia, Thailand, Hong Kong, while it is looking at similar exits in China, Japan and Korea.
Of the proposed acquisition, 26% from ING Group, 16.32% from the Hemendra Kothari Group and 7.68% from the Enam Group for an aggregate consideration of about Rs 550 crore, subject to regulatory approvals. Exide Industries has been a shareholder of ING Vysya Life Insurance since 2005.
Post acquisition EIL would identify and induct a new international player in the life insurance genre to infuse fresh equity into IVL, subject to regulatory approvals for IVL’s expansion plans, the company said in a statement to BSE. ING Group has given rights to Exide to use ING brand for one year post approval of the deal, which is expected within the next two quarters.
According to an Exide official the funding for the acquisition will be done through internal accruals. “For the insurance business we will soon initiate process to rope in some international player,” the official added.
According to senior officials of ING Life Insurance, the operations of the company will not change whatsoever going forward. “Exide was a 50% shareholder already and they will control 100% going forward. It was just a matter of time that this step had to happen as ING had made its intentions clear to exit the insurance business in some of the global markets,” a senior official told Business Standard.
“ING’s exit from the Indian life insurance joint venture is part of the previously announced intended divestment of ING’s Asian Insurance and Investment Management businesses. The process for the remaining businesses is ongoing. Any further announcements will be made if and when appropriate,” the ING Group said.
The transaction announced today is not expected to have a material impact on ING Group results. Subject to regulatory approvals, the transaction is expected to close in the first half of 2013. Today’s agreement does not impact ING Vysya Bank, a publicly listed bank in India in which ING has a 44% stake, nor ING’s fund management business in the country, it said.
The life insurance company saw a growth of 13.1% in new business premiums from April to November 2012 compared to same period in 2011. On the other hand, the private life insurers saw a fall in new premium of 3.7% for the same period. The company is hoping for a 10% growth during the current year.
ING Life Insurance has 1.3% share in the Indian life insurance market and in the private sector insurers it has around 4% of the share. In terms of individual premium collection, it ranked 9th among private life insurers in the country, till October 2012.
ING Vysya Life Insurance has over a decade of experience and serving more than one million customers in over 200 cities in India. The company distributes its products through more than 30,000 ING Life Insurance Advisors, bancassurance partner ING Vysya Bank, Referral Partners, Corporate Agents and Brokers. It has employed 6,000 on its rolls.
Recent insurance deals
2011: Nippon Life buys 26% stake in Reliance Life Insurance for Rs 3062 crore
April 2012: Japan’s Mitsui Sumitomo announced buying of 26% stake in Max New York Life for Rs 2,731 crore. The life insurer re-branded Max Life Insurance Company, as the US-based New York Life exited the joint venture after nearly 10 years.
July 2012: Tata AIG rechristened as TATA AIA following exit of American International Group (AIG) from Hong Kong-based insurer AIA Group
September 2012: Irda approved the 30% stake purchase by Punjab National Bank in MetLife India Insurance.