The Burmese sell 25% of their stake in Aviva Life
The deal will see the Burmese family’s stake drop to 26% from the current 51% in Aviva Life Insurance Co., the people said, on condition of anonymity. Aviva’s stake will increase to 74%, giving the foreign partner control of the life insurer.
“Based on current actuarial valuations, the 25% stake that will be increased by Aviva could be worth at least ??1,500 crores. The business is growing and the potential of Aviva Life is huge, given the niche markets and customer segments in which Aviva Life has a better grip than other life insurers in India, ”said one. of both people.
“If all goes well, the deal should be announced within two months,” the person said.
Confirming the proposed transaction, Mohit Burman, President of Aviva Life Insurance Co. and Vice President of Dabur India, said: “Aviva Plc has decided to increase its stake from 49% to 74% when regulations permit, and the Burman family will continue to be the JV partner. “
Founded 137 years ago, the Burmese Dabur family are known for their brands, including Vatika hair oil, real fruit juices, and Hajmola digestive sweets, among other rapidly evolving consumer goods (FMCGs). The family’s private assets range from restaurants and home health care to life insurance.
The Burman family, which is actively seeking to expand its range of financial services businesses such as investment banking, mutual funds and insurance, has focused more on FMCG business under Dabur India. This could see the family monetizing stakes in some companies and raising revenue to expand the product line and boost Dabur’s FMCG business, which has received a surge since the coronavirus outbreak last year.
Certainly, the Burmese family, among the 20 richest in India, with an estimated net worth of around $ 10 billion according to the Forbes rich list, has been seeking for several months to monetize its stake in Aviva Life and had also entered into talks of sale of shares with co-founder of e-commerce company Flipkart, Sachin Bansal.
The talks, however, did not materialize due to differences in valuations and property conditions, the second person said.
“Sachin Bansal of Navi Technologies has held several rounds of talks with the Burmese family, negotiating the terms of the agreement to purchase the entire Burmese family stake in Aviva Life,” the person said.
” It was last year. Discussions and negotiations with Bansal were completed in March, and we could not come to any conclusions, “said Mohit Burman.
“Neither Bansal nor Navi are currently in talks to buy any stake,” a Navi Tech official said on condition of anonymity.
Meanwhile, Aviva, the world’s fifth-largest life insurer, appears optimistic about India’s business potential in insurance. In 2016, shortly after the government lifted the limit on foreign direct investment in the insurance sector, Aviva chose an additional 23% in the life insurance business of Dabur Invest Corp. for ??940 crores. The agreement valued Aviva Life at approximately ??4,087 crores.
Among other private life insurers, Aviva Life also performed well in fiscal 2021, with new business premiums rising to ??220.2 crore ??217.53 crore in fiscal year 2020. However, since the start of this fiscal year, it appears to be struggling to grow its business relative to other life insurers.
According to the Insurance Regulatory and Development Authority of India (Irdai), Aviva Life recorded a new business premium of ??39.44 crore in the June quarter, less than ??47.21 crore a year ago. India’s private life insurance industry grew by 33.7% over the same period.
The two people named above said that Aviva wanted to expand its business in India and was waiting for New Delhi to further increase the FDI limit in the sector to 74%, which ultimately happened in the budget of the Union 2021-2022.
Never miss a story! Stay connected and informed with Mint. Download our app now !!