Ageas to acquire 40% stake in Royal Sundaram for Rs 15.2 billion

Ageas will acquire 40 per cent of the share capital of Royal Sundaram General Insurance Co. Limited (Royal Sundaram) for Rs 15.2 billion.

Currently, Sundaram Finance Ltd holds 75.90 per cent in Royal Sundaram and seeks to divest 25.90 per cent, retaining 50 per cent of its holding after the transaction. Some of the existing Indian shareholders would hold the remaining 10 per cent in Royal Sundaram. 

The transaction is subject to certain conditions to close including the approval of the Insurance Regulatory and Development Authority of India (IRDAI) and other Regulators. The transaction is expected to close in the first quarter of 2019. 

T T Srinivasaraghavan, Managing Director, Sundaram Finance Ltd, said that over the past 18 years, Royal Sundaram has built a sterling reputation in the market for its customer service excellence, notably in claims management. 

The company has demonstrated strong growth in its chosen segments and is witnessing a rapid growth in profitability. 

"For the next phase of growth, we are delighted to be partnering with Ageas, whose global experience, including in several Asian countries, will be an asset," he said. 

“Ageas is unique in its approach of working through local partnerships and joint ventures across Asia and we believe this can create significant value for Royal Sundaram.”

"Partnering with Sundaram Finance, a well-established company with a vast knowledge of the Indian insurance market offers us a great opportunity to benefit from the potential of what is one of the world’s largest economies with an insurance industry that is expected to grow significantly in the coming years," said Bart De Smet, CEO, Ageas.  

Royal Sundaram is one of the top 10 players in the general insurance market with strong positions in motor and health insurance. 

The company benefits from extended distribution capabilities with a nationwide network of more than 5,600 agents and 700 branches (consisting of its own branches and that of SFL) and relationships with banks and other distribution partners, off and online. 

For the year ended March 31, 2018, Royal Sundaram generated Gross Written Premium of Rs  26.43 billion and achieved a Profit after Tax of Rs 830 million while registering an average annual growth rate of 19 per cent and 56 per cent in GWP and Profit respectively, between 2015 and 2018.