 "Shriram Group eyes HSBC's stake in insurance venture")
Senior officials from the Group and two other industry representatives, who are familiar with the deal, have confirmed the development.
Shriram Capital has hired Axis Capital to advise it on purchase of the stake in HSBC.
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Canara Bank is the largest shareholder in Canara HSBC OBC Life Insurance with 51 per cent holding, while Oriental Bank of Commerce owns 23 per cent.
If the deal comes through, this would be placed under Shriram Capital, the holding company of all the financial services business of the Shriram Group, which already holds two insurance companies - Shriram Life Insurance Company Ltd and Shriram General Insurance Company Ltd. Financial services companies, which come under Shriram Capital, manage around Rs 60,000 crore of assets, according to the Group's website.
A senior group official said that while the life insurance business of the Group is already five to six years old, it could not offer bancassurance since all banks are tied up with one or the other firms. "Either they (banks) must have promoted their own insurance firms or will have some group connection or must have tied-up with Life Insurance Corporation," said the official.
Acquiring a stake in Canara HSBC OBC Life Insurance would be a good bet for the Shriram Group to open the bancassurance channel. The two public sector banks together own around 5,500 branches across the country, which will be a major route to grow the business. The Group sees value in the number of branches.
Industry sources said Shriram had a better opportunity compared with the other main competitors - HDFC Life and ICICI Prudential Life - who want to acquire 100 per cent stake in Canara HSBC OBC Life Insurance Company, which the other two promoters (Canara Bank and Oriental Bank) are objecting to.
No regulatory hurdle
Besides, Shriram won't face any regulatory obstacles, unlike ICICI Prudential or HDFC Life. The regulator mandates that no licence holder could operate two companies, and if there is an owner with stakes in two, they should be merged.
"The Shriram Group's interest comes at a time, when HSBC is stuck in this issue. This may act in favour of the Shriram Group," said an industry source, who has direct knowledge of the development.
Funding for this acquisition will not be a major constraint for the Shriram Group, which is a favourite of private-equity investors. There are 23 private-equity investors, who have invested over $750 million in the Group, with most of the money being in the financial services business.
Last year, South African insurance major Sanlam had infused around Rs 2,000 crore in the Group and picked up a stake in the life insurance venture.
Shriram Life's new business premium income rose by 7.27 per cent to Rs 421 crore in 2012-13. The company has 200 branches, eight lakh customers and sum assured of more than Rs 5,000 crore.