Allianz SE is moving on from its 24-year-old joint venture with Bajaj Group and is reportedly working on a new partnership with Mukesh Ambani-led Jio Financial Services.
According to an Economic Times report, this marks Allianz’s second attempt at entering the Indian life and general insurance market independently.
The German insurance giant will offload its 26 percent stake in Bajaj Allianz General Insurance Co and Bajaj Allianz Life Insurance Co to Bajaj Group for $2.8 billion. The payment is expected to be made in multiple installments.
With this acquisition, Bajaj Group’s ownership in both insurance ventures will increase to 100 percent from the current 74 percent. The group will acquire Allianz’s stake in Bajaj Allianz Life Insurance Co (BALIC) for Rs 10,400 crore and in Bajaj Allianz General Insurance Co (BAGIC) for Rs 13,780 crore.
A statement from Bajaj Finserv said that it would purchase 11,13,295 equity shares of Rs 10 each in BAGIC at a price of Rs 4,808.24 per share and 15,22,161 equity shares of Rs 10 each in BALIC at a price of Rs 2,654.12 per share.
This will amount to a 1.01 percent equity stake in each company, along with all rights and benefits under the share purchase agreements (SPAs) executed with Allianz.
Meanwhile, Allianz has reportedly been in talks with Reliance Industries (RIL), the parent company of Jio Financial Services, for months. The discussions gained traction after Allianz first indicated its intention to exit the Bajaj JV in October last year and have become more serious in recent weeks.
An official announcement on the Allianz-Jio partnership is expected after regulatory approvals from authorities such as the Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (IRDAI). However, Allianz will first need to step down as a promoter of the Bajaj insurance ventures before moving forward with Jio Financial.
According to sources, there is an urgency on both sides to finalise a deal. Allianz wants to re-enter the Indian insurance market, while Jio Financial is looking for major global partners to expand its financial services business.
The joint venture agreements between Bajaj Group and Allianz will be formally terminated once the first tranche of acquisition is completed, covering at least 6.1 percent of the shares. Allianz will then be reclassified from a promoter to an investor in Bajaj Allianz Life and General Insurance.
While no official confirmation has come from Allianz or Jio Financial yet, the move signals a significant shake-up in India’s insurance sector.
