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IAG sells SBI general stake to Premji Invest

Premji will acquire 16.01 per cent and Warburg Pincus Group 9.99 per cent in the company.

ETMarkets.com|
Oct 18, 2019, 10.46 AM IST
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The company has entered into strategic tie-ups with four large car manufactures to drive growth in the motor portfolio.
Insurance Australia Group (IAG) has sold its entire 26 per cent stake in SBI General to Premji Invest and Warburg Pincus for approximately ₹₹3,200 crore, valuing the company at ₹12,800 crore.

Premji Invest (Premji) will acquire 16.01 per cent and Warburg Pincus Group 9.99 per cent in the company. IAG is focusing on its core territories of Australia and New Zealand, and is exiting other markets in emerging Asia.

SBI General Insurance, which began operations in 2010, is a joint venture company between State Bank of India (SBI) and IAG. SBI and IAG currently own 70 per cent and 26 per cent, respectively in SBI General. The company is ranked eighth by way of gross written premiums among private insurers. IAG paid ₹542 crore for its 26 per cent stake. The company has a market share of 3.2 per cent.

The biggest Australian general insurer is restructuring its Asia-Pacific operations and has already exited Indonesia, Thailand and Vietnam. IAG is concentrating on businesses in New Zealand and Australia.

For price discovery, SBI had earlier sold 4 per cent stake in SBI General Insurance for ₹482 crore to Axis New Opportunities Fund and Premji-Invest, valuing the company at ₹12,000 crore in September 2018.

SBI General has a share capital of ₹210 crore. It had recorded 32.83 per cent growth in gross written premiums in FY19 at ₹4,717 crore, compared with broader industry growth of 12.95 per cent.

The company has entered into strategic tie-ups with four large car manufactures to drive growth in the motor portfolio. It currently has a presence through 23,000 branches of the State Bank group and more than 5,500 regional rural banks. That ensures reach in more than 110 cities.

Private equity funds have been buying into insurance as India is one of the world’s fastest-expanding markets, with the industry set to expand to $280 billion by FY20, according to a study by the Associated Chambers of Commerce and Industry of India (Assocham). KKR is an investor in SBI Life, while True North has bought 51 per cent in Max Bupa.

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