South African insurer Sanlam Group will acquire majority stake in two insurance joint ventures with Shriram Group to enhance the company’s geographic diversification and penetrate the fast-growing Indian insurance market.
Sanlam Emerging Markets Mauritius Ltd. will increase stake in Shriram General Insurance Co. to 50.99% from 40.25%. The shares will be acquired from the local arm of US private equity major, TPG Inc.
The stake in Shriram Life Insurance will be increased from 42.38% to 54.4%, after purchase of shares from Shriram Ownership Trust.
Shriram Ownership Trust is the promoter of Shriram Capital Pvt., which is the overarching holding company of the Chennai-based $34 billion Shriram Group.
The deal is funded partially using the net proceeds from the disposal of its Shriram Finance Ltd. shares last month for Rs 1,427 crore and the balance ZAR 2.0 billion (Rs 892 crore) is funded using a combination of available capital resources. The transaction is expected to be completed during the second half of 2024.
SGIC offers a wide range of general insurance solutions including motor, travel and home. SLIC offers a diverse basket of long-term financial products and solutions, targeted mainly at the underbanked and unbanked segments in India. Sanlam has been in partnership with Shriram Group since 2005.
The acquisition will increase Sanlam’s exposure to India's insurance market, which is set to benefit from a number of underlying structural tailwinds driving an attractive growth opportunity in insurance, Sanlam said.
The deal also "builds upon existing and established corporate infrastructure, relationships, and long-standing knowledge of SGIC and SLIC".
After the disposal of the part of a direct holding by Sanlam in Shriram Finance, the South African company's stake will decrease from 10.19% to 9.54%. Last year, TPG exited Shriram Finance by selling 2.65% stake through the bourses.
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