Bennett, Coleman and Company Limited (BCCL) has entered into an agreement with Religare Enterprises to buy out its stake in Aegon Religare Life Insurance, taking its total stake in the company to 72 per cent. BCCL currently has 28 per cent stake in the life insurer. The balance stake is currently held by Aegon India Holdings (26 per cent) as a foreign shareholder, and Aegon Religare Employee Benefit Trust (two per cent).
Religare Enterprises on Tuesday informed the exchanges that BCCL would acquire its 44 per cent stake in the life insurer in which BCCL already has 28 per cent stake. Religare also said Aegon would increase its stake in the joint venture company to 49 per cent, without giving any details. But this implies that after the deal receives all necessary approvals, BCCL would dilute its stake by 23 per cent.
BCCL has been a stakeholder in the life insurer ever since its inception in 2008. It initially had 30 per cent stake in the company.
This is not the first time that BCCL has been active in the financial services space. BCCL earlier was the promoter of Times Bank, which was later merged with HDFC Bank, effective February 26, 2000.
Sources said Religare Enterprises’ 44 per cent stake could be valued at about Rs 1,000-1200 crore, valuing the firm at around Rs 2,300-2700 crore.
This transaction is subject to necessary and appropriate regulatory approvals of the Competition Commission of India, the Foreign Investment and Promotion Board (FIPB) and the Insurance Regulatory and Development Authority of India (Irdai).
The foreign entity has expressed its interest to raise stake in the venture to 49 per cent, the maximum permissible under the new insurance law. However, this would need approval from the FIPB.
In September 2014, Religare had informed stock exchanges that it was planning to exit from its joint venture as part of a strategic review.
Aegon Religare Life Insurance has seen a healthy growth in first year premiums (excluding single premiums), both in the third quarter ended December 31, 2014, and also the first nine months of the last financial year. The insurer posted a 41 per cent rise in first year premiums for the third quarter. The first year premiums for the nine months stood at Rs 106.8 crore, up 32 per cent from the previous financial year.
Apart from the life insurance company, Religare is also present in health insurance through its company Religare Health Insurance, which is a standalone health insurer.
Past cases of Mergers & Acquisition in insurance (also includes expression of intent to exit):
2011: Nippon Life buys 26 per cent stake in Reliance Life Insurance at an aggregate value of Rs 3,062 crore
April 2012: Japan’s Mitsui Sumitomo (a unit of MS&AD Insurance Group Holdings) announces buying of 26 per cent 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 approves the 30 per cent stake purchase by Punjab National Bank in MetLife India Insurance. Now called PNB MetLife Insurance
January 2013: Exide Industries decides to acquire 50 per cent remaining stake in ING Vysya Life Insurance for Rs 550 crore, subject to regulatory approvals. ING exits venture. Later re-named Exide Life Insurance
March 2013: Pantaloon Retail enters into agreement with Industrial Investment Trust Limited (IITL) to sell 22.5 per cent of its stake in Future General India Life Insurance
March 2013: L&T, Future Group and Generali Group had signed a non-binding term sheet for the merger of L&T General Insurance and Future Generali India Insurance. Deal later called off in April 2014.
July 2013: DLF says it is selling its stake in DLF Pramerica Life Insurance to Dewan Housing Finance. Later re-named DHFL Pramerica Life Insurance
June 2014: Jammu & Kashmir Bank looks to exit PNB MetLife Insurance by selling its entire five per cent stake. Deal has not yet been completed
September 2014: Religare Enterprises says that it intends to exit AEGON Religare Life Insurance.
December 2014: Azim Premji Trust says it will buy 0.95 per cent stake in HDFC Life for Rs 198.9 crore.
May 2015: Religare to exit Aegon Religare Life after selling off its 44% stake to BCCL