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German insurance major Allianz SE announced its decision to exit its Indian insurance joint ventures with the Bajaj Group. Nearly six weeks after the government permitted 100% FDI in insurance ventures, Allianz entered into binding agreements with Bajaj Finserv Ltd to sell its 26% stakes in Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC). The transaction, valued at INR 24,600 crore (EUR 2.6 billion), would be paid in tranches. Bajaj Finserv will subsequently hold 75.01% equity in each firm, while promoter entities Bajaj Holdings and Investment Ltd and Jamnalal Sons Pvt Ltd will acquire the remaining 24.99% equity. The deal also includes Bajaj Finserv's acquisition of Allianz's entire stake in Bajaj Allianz Financial Distributors Limited (BAFDL).
German insurance major Allianz SE has announced its decision to exit its long-standing insurance joint ventures with the Bajaj group, marking a significant shift in the Indian insurance landscape. The development comes nearly six weeks after the Indian government permitted 100% foreign direct investment (FDI) in insurance ventures, paving the way for strategic realignments within the sector. Advertisement
Despite relaxed FDI limits, Allianz did not increase its stake due to a disagreement with Bajaj after a pre-agreed plan to raise the stake within 15 years could not be implemented.
Allianz has agreed to divest its 26% stakes in both its life and non-life joint ventures with Bajaj Finserv Ltd-Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC). The total consideration for the transaction stands at EUR 2.6 billion (approximately INR 24,600 crore). Allianz disclosed that it expects to receive the sale proceeds in multiple installments.
In a publicly issued statement, Bajaj Finserv confirmed the execution of binding share purchase agreements with Allianz to acquire the latter's stakes in the two insurance companies. The acquisition involves the purchase of 11.13 lakh equity shares of face value INR 10 each in BAGIC at a price of INR 4,808.24 per share. Additionally, Bajaj Finserv will acquire 15.22 lakh equity shares of INR 10 each in BALIC at INR 2,654.12 per share. These acquisitions, representing an additional 1.01% equity stake in each of the two companies, include all corresponding rights, titles, benefits, and interests as per the terms of the agreements.
Bajaj Allianz Life has an embedded value of nearly INR 23,000 crore. The life insurance company has a 3% market share in terms of premium, while the non-life venture has 7% market share as of February.
Following the completion of this transaction, Bajaj Finserv's holding in BAGIC and BALIC will rise to 75.01% of the total equity share capital in both companies. Consequently, the entire equity shareholding of both BAGIC and BALIC will be consolidated between Bajaj Finserv (75.01%) and its promoter group entities (24.99%).
In addition, Bajaj Finserv's board has approved the acquisition of Allianz's entire equity interest in Bajaj Allianz Financial Distributors Limited (BAFDL), a 50:50 joint venture between the two partners. Bajaj Finserv will purchase 12 lakh equity shares of face value INR 10 each from Allianz for a consideration not exceeding INR 12.5 crore. Upon completion, Bajaj Finserv will own 100% of BAFDL.
The transaction remains subject to regulatory approvals, which are expected to take several months. Upon completion of the share transfer and Allianz's withdrawal as a promoter from BAGIC and BALIC, the joint venture agreements between Allianz SE and Bajaj Finserv will be formally terminated.
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