Zurich Insurance Company Ltd has entered into a dealt to acquire a 51% stake in Kotak General Insurance, a fully-owned subsidiary of Kotak Mahindra Bank, for ₹4,051 crore via a combination of “fresh growth capital and share purchase”.
Zurich will acquire an additional 19% stake in three years from its initial acquisition. Kotak Bank says the investment marks the “single largest investment” by a global strategic insurer in an Indian non-life insurer.
Kotak Mahindra Bank will receive around ₹4,051 crore for a 51% stake, including fresh growth capital of up to around ₹1,609 crore in Kotak General Insurance. The proposed transaction values Kotak General Insurance at ₹7,943 crore on a post-money valuation.
The deal is subject to customary conditions precedent including regulatory approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India, and the Competition Commission of India.
According to Dipak Gupta, MD & CEO, Kotak Mahindra Bank Ltd, Kotak Mahindra Group’s pan-India ‘phygital’ distribution presence and Zurich’s distinct global capabilities in digital assets, B2B and B2C formats has the potential to create a transformational ‘digical’ impact for the Kotak General Insurance franchise.
Kotak Mahindra General Insurance's turnover for the fiscal year ending March 2023 stood at ₹1,148.30 crore, while its turnover as percentage of the bank’s consolidated total income was 1.7%. The company's net worth stood at ₹341.07 crore.
Tulsi Naidu, CEO Asia Pacific, Zurich Insurance Company says Kotak Mahindra Group offers high-quality franchises and expertise in Indian financial services, and Zurich has deep distribution experience and class-leading capabilities in retail and commercial insurance.
The companies expect the deal to close on June 30, 2024, subject to customary conditions precedent including regulatory and other approvals. Once Zurich acquires the 51% shareholding in Kotak General Insurance, it will cease to be a subsidiary of the bank.
Gaurang Shah, chairman, Kotak Mahindra General Insurance says the company has invested to create a "multi-product franchise", with very strong fundamental building blocks. "Zurich, a premier global insurer, with its deep global relationships, robust capabilities in complex risk and successful track record of long-term alliances will help Kotak General Insurance grow rapidly and deliver exceptional value to our customers.”
Zurich, headquartered in Switzerland, is a 100% subsidiary of Zurich Insurance Group Limited, which is a leading multi-line insurer serving people and businesses in more than 200 countries and territories. The Group has about 60,000 employees and is headquartered in Zurich, Switzerland. Zurich Insurance Group is listed on the SIX Swiss Exchange and does not belong to the promoter or promoter group.
Reacting to the development, Kotak Mahindra Bank shares are trading 0.94% up at ₹1,739.85 on the BSE. The stock at the current share price is trading 15% down as compared to the 52-week high of ₹2,063 achieved on May 31, 2023. With this, the m-cap of the company stands at ₹3.4 lakh crore.
