Aditya Birla Nuvo sells 23% in insurance venture to Sun Life for Rs 1,664 crore

Canadian firm Sun Life Financial will increase its stake in its Indian joint venture, Birla Sun Life Insurance to 49 per cent from 26 per cent for a 1,664 crores transaction which  is subject to the requisite statutory and regulatory approvals, informed the company in a BSE filing. The deal values the Indian life insurance company at Rs 7,235 crore. The move follows the government’s decision to increase the foreign direct investment cap in the insurance sector to 49 per cent from 26 per cent.

The life insurance is a joint venture between Aditya Birla Nuvo Limited a part of the Aditya Birla Group and Canadian life insurance company Sun Life. ABNL has entered into an agreement with the Canadian insurance major Sun Life to sell approximately 43.70 crore equity shares constituting 23 percent of the issued and paid up equity share capital of BSLI. On completion of the transaction, Sun Life's stake in BSLI will increase from its current 26 percent to 49 percent while ABNL will continue to hold the controlling stake at 51 percent.The transaction is expected to close by the end of FY2015-16, subject to the customary closing conditions and the requisite statutory and regulatory approvals in India and Canada.

Financial Services is one of our fastest growing businesses and is among the core businesses of the group. Sun Life, the joint venture partner, found  many synergies that are reflective of their belief and commitment towards the Indian market. Both Sun Life and ABNL have closely partnered in building the life insurance business to its current scale, investing heavily in both capital and resources.

Today, BSLI is one of the leading private life insurance players in India, with the new business premium market share of 7.9 percent for the half year ending 30th September 2015. It enjoys the trust of 16 lakh policyholders and an extensive distribution reach spanning 418 cities through a network of over 55,000 advisors across 489 branches.

Aditya Birla Nuvo shares were trading with a gain of close to 1 percent after this stake sale news. The stock off late has been trading in a range bound fashion which is indicated by a return of 6 percent in the last 3 month period. Though it has recovered a bit from its recent lows of Rs 1950 to Rs 2120 levels.

In the recent months, the insurance sector has been a hotbed of activity after the government allowed foreign companies to hold a 49 per cent stake in Indian insurers from 26 per cent earlier. A number of foreign players have joined the bandwagon, British health insurer Bupa Plc, Japan’s Nippon Life and Tokyo Marine, UK insurer Aviva Plc, French firm Axa and Australia’s QBE Group and Insurance Australia Group Ltd are among the companies that have raised or are planning to raise their stake in their Indian insurance JVs.