Sundaram Finance to buy out RSA's 26% JV stake for Rs450 cr
19 February 2015
Sundaram Finance, the majority partner in the joint venture insurance company, Royal Sundaram Alliance Insurance Company, is buying out partner RSA Group's 24-per cent stake in their 15-year joint venture.
Sundaram Finance, which currently owns 74-per cent stake in the company, will acquire UK-based RSA's stake for Rs450 crore ($70 million).
"This transaction continues the excellent momentum of our disposal programme and represents further progress in tightening the strategic focus of the Group," RSA Group chief executive Stephen Hester said.
RSA said the sale will result in a gain of around £16 million (Rs1,534 million) and a net addition of about £19 million (to the group's tangible net assets. It expects the transaction to close in six months.
With this divestment, the RSA Group will exit the insurance joint venture Royal Sundaram Alliance Insurance Company.
Sundaram Finance, a TVS group company, said SFL and other TVS Group companies will jointly acquire the UK partner's 26 per cent stake.
Sundaram finance said while RSA brought value to the company, the exit will not affect the company as it has enough expertise to run the show.
SFL said, it was a part of RSA's global strategy as the company has been exiting non-core business in non-core markets, including Singapore, Hong Kong and China over the past six months. It is likely to exit from Thailand also
Claimed to be the first Indian private non-life insurance company, Royal Sundaram provides general insurance products, including motor, health, personal accident, home and travel insurance for individual customers.
The company also offers a wide range of fire, marine, engineering and liability policies for commercial clients in the country.
In April 2014, RSA signed an agreement to divest its insurance business in the Baltics and Poland to Powszechny Zaklad Ubezpieczen sa (PZU), in a cash transaction worth £300 million.