Bajaj Finserv on Monday announced that it has signed share purchase agreements (SPAs) with Allianz SE under which it will acquire a 26 percent stake in two insurance joint ventures—Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC). The deal will be for Rs 24,180 crore.After this acquisition, Bajaj Group’s stake in both these insurance companies will increase from 74 percent to 100 percent. Bajaj Group will buy a 26 percent stake in BALIC for Rs 10,400 crore and BAGIC for Rs 13,780 crore. However, this acquisition is subject to regulatory approvals, including approval from the Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (IRDAI).Under the terms of the SPA, Bajaj Finserv will acquire approximately 1.01 percent, Bajaj Holdings & Investments approximately 19.95 percent, and Jamnalal Sons approximately 5.04 percent stake, taking the total stake in each insurance company to 26 percent. Post the acquisition, Bajaj Finserv’s stake in both the companies will increase to 75.01 percent. After the joint ventures are terminated under the terms of the SPA, Bajaj Group and Allianz plan to pursue their insurance strategies in India independently.According to the statement, the 24-year-old joint venture agreements between Bajaj Group and Allianz SE for the insurance business will end upon completion of the acquisition of at least a 6.1 percent stake in the first tranche and reclassification of Allianz from a promoter to an investor.Sanjiv Bajaj, Chairman and Managing Director, Bajaj Finserv, said, “Together with Allianz, we have created two of India’s strongest insurance companies with a combined premium of over Rs 40,000 crore and maintaining the best solvency margins in the industry. We are committed to providing better access to insurance in India, financial stability, and a better experience for our customers. With the benefit of single ownership in both companies, we are confident that this acquisition will add significant value to our stakeholders in the years to come.”Allianz and Bajaj are fully committed to ensuring a smooth transition with minimal impact on policyholders, intermediaries, and other stakeholders. Bajaj Finserv and Allianz have also signed agreements that will ensure continuity of reinsurance and other services during the transition, the company said in a statement.Shares of Bajaj Finserv, the non-banking financial services arm of Bajaj Group, climbed nearly 2% in opening trade on Tuesday, extending gains for the second straight session. The stock gained momentum today after it signed a deal with Allianz SE to acquire a 26% stake in the two insurance joint ventures—Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC)—for ₹24,180 crore.Talking on this topic, Malay Sourav, a finance analyst at an MNC, said, “The acquisition is not likely to impact existing business operations, and hence customers can expect the same level of service. As Bajaja gains full control of the insurance business, they may opt to rebrand their company to align themselves with their overall business. Bajaj has a strong reputation in the market in terms of claim-paying ability. It has also been rated as AAA by ICRA Limited. Additional investment will further strengthen its financial position.”
Reporting to True to Life News.