KKR signs deal to buy 10% stake in Shriram Gen Insurance for Rs 1,800 cr

KKR's investment builds on strong tailwinds in the Indian general insurance space and SGI's continued expansion into new segments and investment in its digital capabilities

Global investment major KKR & Co has entered into a definitive agreement to acquire a 9.99 per cent stake in Shriram General Insurance (SGI) for around Rs 1,800 crore. The stake is currently owned by Shriram Capital.

“KKR’s investment will position Shriram General Insurance for continued growth in India’s fast-growing general insurance industry,” the insurer said in a statement. The agreement awaits regulatory approvals. SGI was valued at around Rs 18,000 crore. There will be one representation from KKR on Shriram General’s board post the consummation of the deal.

KKR’s investment builds on strong tailwinds in the Indian general insurance industry and SGI’s continued expansion into new segments and investment in its digital capabilities to meet the evolving needs and preferences of Indian consumers, the statement added.

“We are delighted to welcome KKR as our investor, and look to benefit from their global insurance expertise as well as significant experience, taking Indian companies to the next level. We look forward to collaborating closely to strengthen Shriram General Insurance’s offerings to Indian consumers and achieve continued success,” said Anil Kumar Aggarwal, managing director and chief executive officer, Shriram General Insurance.

The company added that the it was adopting a customer-centric approach towards business and focused on nurturing homegrown talent and maximising technology to meet the needs of underserved segments of the economy. Gross written premium for the general insurer in financial year 2021-22 (FY22) is expected to be more than Rs 1,750 crore. As of the December quarter, it had earned a profit before tax of Rs 619 crore and profit after tax of Rs 467 crore.

Speaking to Business Standard, Jasmit Singh Gujral, vice-chairman, Shriram General Insurance, said, “We intend to grow our non-motor business, which for the last 12-13 years we have been shying away from because we thought that the prices that are prevalent in the market were unviable. A couple of years back, the Insurance Information Bureau had come out with certain tariff guidelines and that made it little exciting for us. We have now started putting ourselves in the market for the non-motor business, which includes every segment apart from crop insurance.”

“We will be getting into the health business in a small fashion to start with and we will be launching some health products this year,” he said. 

The company is open to a inorganic growth opportunities in the future. “In case any worthwhile opportunity that synergises and takes the institutions to the next level comes along, we will definitely be looking at it. The solvency says it all, we have money in the pocket,” Gujral said. It has a solvency ratio of 4.7 times compared to the regulatory minimum of 1.5 times. 

Founded in 2008, SGI is a joint venture between Shriram Capital, the holding company for Shriram Group’s financial services business, and Sanlam, a leading pan-African financial services group.

“Shriram General Insurance has been one of the standout performers in India’s fast-growing general insurance industry, and continues to build on its record by developing new capabilities, channels, and products to meet the growing needs of Indian consumers,” said Gaurav Trehan, partner and chief executive officer (CEO), KKR India.

“We are truly excited to work with the Shriram Group and SGI’s high-quality management team to achieve their vision of serving their customers, and look forward to sharing our experience to take the company to new heights,” he added.

The development comes close to the announcement of the merger of Shriram Capital (SCL) and Shriram City Union Finance (SCUF) with Shriram Transport Finance (STFC) as part of the restructuring in the group. The new entity, which will be the largest retail non-banking financial company (NBFC) in India, will be named Shriram Finance (SFL).

Recently, Umesh Revankar, vice chairman and managing director, Shriram Transport Finance, had told Business Standard the company was moving to National Company Law Tribunal (NCLT) for clearances and the final nod may happen by October - November this year.

Meanwhile, some of KKR’s investments in the sector have included those in HDFC, SBI Life Insurance, Max Life, and Five-Star Business Finance.

Since setting up its Mumbai office in 2009, KKR has made more than 20 investments in India with more than a dozen active portfolio companies now.