Reliance Industries Acquires Bharti's Stake In Insurance JVs

RIL and its associate Reliance Industrial Infrastructure Limited (RIIL) would effectively own 57% and 17% in both insurance companies, Bharti AXA Life Insurance Company Ltd andBharti AXA General Insurance Company Ltd and would become AXA’s JV partners in India. While AXA would retain its current 26% stake and continue to manage the operations of both JVs, the deal allows it to acquire from Reliance up to 24% stake in both the insurance companies in accordance with the applicable regulations as and when the FDI regulations permit such a holding by AXA. Upon exercise of this option RIL will reduce its holding to 45% from 57%, while RIIL will own 5%. Bharti intends to use the proceeds towards other group businesses in India and abroad. Transaction Reference: Press Release

TRANSACTION NOTE               Bharti had entered into insurance JVs with the AXA group in 2006 and held 74% stake in both these ventures. As per the current rules, a foreign entity can hold up to 26% in an Indian insurance firm.. In the year ended March 2011, Bharti AXA Life collected premiums of Rs.790 Cr, while Bharti AXA General Insurance collcted Rs. 550 Cr. Recently, Bharti Enterprises was  planning to sell a controlling stake in its mobile software development unit, Comviva Technologies Ltd. In March this year, Reliance Industries announced that it will set up a JV with DE Shaw Group to build a financial services business in India.The JV will incorporate the DE Shaw Group's investment and technology expertise with Reliance's operational knowledge and presence across India, to offer various financial services to the Indian market. The AXA group is engaged in insurance and asset management, with 214,000 employees serving 95 million clients. In 2010, its (IFRS) revenues amounted to 91 Bn Euros. In March this year, Japan-based Nippon Life Insurance Company acquired 26% stake in Reliance Life Insurance for $680 Mn (Rs.3,062 Cr), valuing the company at $2.6 Bn (Rs.11,500 Cr). Punjab National Bank is also looking to to acquire 33% stake in Metlife India Insurance Company Limited.