Hinduja-ADIA consortium in talks to buy AXA stake In life insurance JV with Bharti

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#ABU Dhabi Investment Authority, #ADIA, #Bharti Axa Life insurance, #Hinduja Group, had reported

Hinduja Group has teamed up with sovereign wealth fund ADIA (Abu Dhabi Investment Authority) to make a splash in the domestic insurance sector through a significant deal, multiple industry sources with knowledge of the matter told Moneycontrol. Their first target: the stake held by French insurance major AXA in the Bharti-AXA Life Insurance joint venture.

“A consortium of the Hinduja Group and ADIA has entered exclusive negotiations to purchase AXA’s stake,” one of the persons cited above told Moneycontrol.

AXA owns a 49 percent stake in the life insurer and Bharti Group holds the balance 51 percent.

A second person familiar with ongoing negotiations said the Hindujas, a diversified banking-to-auto conglomerate, had always been keen on beefing up its insurance play and move beyond bancassurance and distribution. In the past, group entity IndusInd Bank has partnered with many life insurance players to sell the latter’s insurance policies through the lender’s branches.

“They were keen to tie up with a marquee player like ADIA and co-invest in this opportunity. One of the group entities of the Hinduja Group will be used as the investment vehicle,” he said.

ADIA is no stranger to insurance and in recent years, the Gulf investment major has been an anchor investor in the initial public offerings (IPOs) of ICICI Lombard, SBI Life Insurance, PolicyBazaar and more recently Star Health Insurance.

“Investment bank Jefferies is working as an advisor on the proposed transaction. The due diligence process is likely to be completed by early 2022,” said a third person, adding that Axa was looking to exit its India bets.

In 2020, ICICI Lombard entered into a definitive agreement to acquire Bharti Enterprises-promoted Bharti AXA General Insurance in an all-stock transaction. Currently, an AXA investment arm holds around 3.5 percent stake in the merged entity.

All the three persons spoke to Moneycontrol on the condition of anonymity.

In response to an official email query from Moneycontrol, a Hinduja Group spokesperson said, “As a policy, the Hinduja Group does not respond to market speculation of any nature. The Hinduja Group is scouting for suitable opportunities to broaden its investments in BFSI and Technology sectors apart from other verticals and their adjacencies in which it is presently invested.”

ADIA declined to comment while AXA said it would not comment on market rumours.  A spokesperson for Bharti AXA Life Insurance said: “As a policy, we do not comment on market speculation.” Moneycontrol is awaiting an email response from Jefferies and will update this article as soon as we hear from them.

Bharti AXA Life Insurance has a pan-India presence through its 254 offices and offers a range of value for money and need-based insurance products targeted at individuals and groups.

AXA is a French multinational insurance firm headquartered in Paris and engages in global insurance, investment management and other financial services. It operates primarily in Western Europe, North America, the Asia Pacific and the Middle East, with presence also in Africa.

On November 18, Moneycontrol had reported that Prateek Indwar, EVP and Group Head (Investment Banking), SBI Capital Markets had resigned and was headed to IndusInd Bank. Post joining, Indwar was likely to be closely involved with the private sector lender’s potential initiatives or forays into non-core banking areas and ancillary activities like mutual fund, insurance and other segments, the report had added.

THE BIG BANG LIFE INSURANCE OPPORTUNITY

According to a report by Emkay Global Financial Services on the growth prospects for listed firms in the life insurance segment, the favourable underlying demand factors for life insurance will lead to an overall premiums growth of ~15 percent annually for the next decade, leading to ~4x increase in total life insurance premiums to Rs 24 lakh crore by FY31.

The report cited economic growth and favourable demographic changes amid very high and rising mortality protection gap and longevity (retirement) savings gap as the key triggers for the sector.

According to data available on the Invest India website,  life insurers recorded new business premium of $38 billion in FY21 growing at 7.49 percent over the last year with private life insurers growing at 16.29 percent. Private Life Insurers account for 33.8 percent of the industry’s new business premium (FY21) with the rest being accounted for by the Life Insurance Corporation of India (LIC), the data said.

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