Exide to buy out partners' stake in ING Vysya Life

Acquisition to be worth Rs 550 crore, funding via internal accruals

Exide Industries Ltd, India’s largest producer of automotive and industrial batteries, which holds 50 per cent of the equity capital of ING Vysya Life Insurance Co (IVL), said it would acquire the remaining stake in the insurer.

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 South Korea.

Exide will acquire 26 per cent from ING Group, 16.32 per cent from the Hemendra Kothari group and 7.68 per cent from the Enam Group for an aggregate consideration of about Rs 550 crore, subject to regulatory approvals. Exide has been a shareholder of IVL since 2005. After the buyout, Exide will 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 the Bombay Stock Exchange. ING Group has given rights to Exide to use the ING brand for one year post approval of the deal, which is expected within the next two quarters.

RECENT INSURANCE DEALS

2011
Nippon Life buys 26% stake in Reliance Life Insurance for Rs 3,062 cr

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 from Hong Kong-based insurer AIA Group

September 2012
Irda approved the 30% stake purchase by Punjab National Bank in MetLife India Insurance

According to an Exide official, the funding for the acquisition will be done through internal accruals. “For the insurance business, we will soon initiate the process to rope in some international player.” According to senior officials of IVL, the operations of the company will not change whatsoever going forward. “Exide was a 50 per cent shareholder already and they will control 100 per cent, 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 said.

Said ING Group: “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 transaction is not expected to have a material impact on ING Group results. The deal 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 per cent stake, nor ING’s fund management business in the country, it said.

The life insurer saw a growth of 13.1 per cent in new business premiums from April to November 2012, compared with the corresponding period in 2011. On the other hand, private life insurers saw a fall of 3.7 per cent in new premium during the same period. The company is hoping for a 10 per cent growth this year.

IVL has 1.3 per cent share in the Indian life insurance market and among the private sector insurers, it has around four per cent market share. In terms of individual premium collection, it ranked ninth among private life insurers, till October 2012.

IVL has over a decade of experience and is serving more than one million customers in 200 cities in India. The company distributes its products through more than 30,000 IVL advisers, bancassurance partner ING Vysya Bank, referral partners, corporate agents and brokers. It employs 6,000 on its rolls.