Sanlam said on Friday that it had reached agreements to significantly increase its shareholding in the Shriram Group insurance businesses in India.
The transaction will see Sanlam increase its stakes in Shriram General Insurance (SGIC) and Shriram Life Insurance (SLIC). Sanlam’s effective economic shareholding in SGIC will increase to 51% from 40%, and in SLIC to 54% from the current 42%.
Sanlam, which currently owns a 10.2% shareholding in Shriram Finance (SFL), reallocated capital from the SFL credit business and allocated additional capital to increase its stakes in SGIC and SLIC, while slightly reducing its exposure to SFL to 9.5%.
Sanlam Group chief executive Paul Hanratty said on Friday that they saw India as a core market and strategic pillar in achieving long-term earnings growth and sustainable shareholder value creation.
“The country has very strong growth dynamics, with relatively low insurance penetration. Growth in the insurance sector has been strong, fuelled by easing regulatory policies, fast-paced digitisation and increased awareness among customers,” he said.
The transaction will enable Sanlam to enhance its position in India’s insurance market. The deal also reaffirms Sanlam’s confidence in India’s economy.
“We have been in partnership with the Shriram Group since 2005 and during this time Sanlam has gained a deep understanding of the Indian insurance market, as well as the portfolio of businesses under the Shriram group,” Hanratty said.
He said the business continued to deliver strong growth in key performance indicators and the transaction underlined the value of Sanlam’s partnership with Shriram. The transaction also supported Sanlam’s position as a major player in emerging markets.
The deal would Increase Sanlam’s exposure to the under-penetrated and fast-growing Indian insurance market, set to benefit from several underlying structural tailwinds driving an attractive growth opportunity in insurance.
It would build upon existing corporate infrastructure, relationships and knowledge of SGIC and SLIC; the disciplined approach to capital management would be maintained, with limited additional capital outlay.
The effective date of the transaction was expected to occur during the second quarter of 2024.
SGIC and SLIC are joint ventures in India between Shriram Capital and Sanlam licensed with the Insurance Regulatory and Development Authority of India. SGIC offers general insurance solutions including motor, travel and home. SLIC also offers long-term financial products targeted mainly at the under-banked and unbanked segments of the Indian population.
SFL is India’s second-largest retail non-bank financial services company by assets under management, offering credit solutions for commercial vehicles, two-wheeler vehicle loans, car loans, home loans, gold loans as well as personal and small business loans. SFL is listed on the National Stock Exchange of India.
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