South Africa’s leading financial group Sanlam is picking a direct stake in the Shriram Group’s life and non-life insurance firms. Currently, Sanlam holds 26 per cent stake in the Rs 90,000 crore Shriram Capital Ltd (SCL), the holding company of Shriram Life Insurance and Shriram General insurance and other financial services businesses.
While Shriram Group refused to comment, Sanlam has confirmed the acquisition of a 23 per cent stake in Shriram Life and Shriram General.
Sanlam confirm that it has submitted its application to now also acquire a direct stake of 23 per cent in both Shriram Life Insurance Company and Shriram General Insurance Company, said Sanlam.
The company did not comment on the quantum it would invest, however market sources said in life insurance alone the stake is valued over Rs 500 crore.
Shriram’s life and non-life insurance ventures were originally floated along with Sanlam, but later Sanlam’s holding was transferred to SCL as part of restructuring. Sanlam picked up 26 per cent stake for Rs 1,600 crore in SCL, which is the holding company of Shriram’s Group finance businesses including two NBFCs, insurance ventures, chit funds and others. Assets Under Management (AUM) of SCL is in excess of Rs 90,000 crore.
Ajay Piramal is the chairman of Board of Directors of Shriram Capital Ltd.
Once the stake is acquired in the insurance firms, Sanlam will hold 23 per cent directly and another 26 per cent indirectly, through Shriram Capital.
Sanlam currently holds a 26 per cent stake in Shriram Capital Limited through Sanlam Emerging Markets (SEM).
Earlier Shriram Group’s Chairman R Thyagarajan said that all 3 investors – Shriram, Piramal and Sanlam – will have equal shareholding in Shriram Capital.
In 2014, Piramal purchased stake in SCL. Besides, financial services Piramal also invested in other businesses of Shriram Group including Shriram Group’s real estate arm.
The Sanlam and Shriram partnership dates back to 2005 and Sanlam believes that the Shriram Group is well positioned for growth in the Indian market, said the South African financial conglomerate.
“This planned acquisition is in line with SEM’s commitment to drive growth opportunities in both current and new markets, focusing on existing partners in emerging markets that offer a good distribution capability and have a strong brand”.
The development comes after the government eased foreign direct investment norms in insurance last year.
Currently, Shriram Life is growing at about 25 per cent year-on-year and is expected to continue the momentum. Likewise, the non-life insurance firm growing at over 15-16 per cent.
The insurance vertical (both life and non-life) contributes about 20 per cent to SCL’s overall business and this is also set to grow.
Upto January 2015, Shriram Life collected a first premium of Rs 508.07 crore as against RS 371.67 crore, a year ago. The company is targeting a growth of 20-25% this year.