Mumbai, July:
US based fourth largest international re/insurance broker Gallagher is set to be the first global broker to set up a 100 per cent operation in India by buying out 70 per cent stake in its Indian joint venture, Edelweiss Gallagher Insurance Brokers Ltd, for Rs 307.60 crore.
Gallagher and Edelweiss had entered into a partnership in May 2019, with the former acquiring a 30 per cent shareholding in the insurance broking business.
Effectively, Edelweiss Financial Services will exit the insurance broking business by selling its 70 per cent stake in the joint venture-Edelweiss Gallagher Insurance Brokers.
The business will rebrand to Gallagher in the coming months.
Though, the government had allowed 100 per cent operations for international operations in India two years back, no international broker had availed this opportunity so far.
Currently,there are six to seven international brokers which are having Indian joint ventures for over last 15 years.
Industry sources point out that US based Marsh, the largest international re/insurance broker, which is having a 49 per cent stake in the Indian joint venture,is in the process of buying out its local investors including Dadi Seth, former chairman, Hindustran Unilever Ltd and Sanjay Kedia, incubment CEO of Marsh India, to have a 100 per cent operation in India.
Earlier, UK based Guy Carpenter, the reinsurance broking arm of Marsh,had planned a 100 per cent reinsurnace broking operation in India but the current status of the plan is not known, said sources.
Arthur J. Gallagher & Co., the Rolling Meadows, Ill.-based insurance broker, has operations in 56 countries and offers client service capabilities in more than 150 countries around the world through a network of correspondent brokers and consultants.
''The company has entered into an agreement… to divest its entire shareholding (currently 70 per cent) in Edelweiss Gallagher Insurance Brokers Ltd, a subsidiary, engaged in the business of insurance broking to Arthur J Gallagher & Co…,'' Edelweiss Financial Services said in a regulatory filing.
The company said, as per the agreement 37,00,000 equity shares of Rs 10 each representing 70 per cent of the paid up share capital of Edelweiss Gallagher Insurance Brokers held by the company to be sold for a consideration of Rs 307.60 crore, in one or more tranches, in the manner as set out in the agreement.
In addition to the sale consideration, Edelweiss Financial Services will also be entitled to receive a deferred contingent consideration based on the future revenue of Edelweiss Gallagher Insurance Broker, in the manner set out in the agreement.
Rashesh Shah, Chairman, Edelweiss Group said the sale will provide the company ''with the flexibility to reallocate capital and invest in scaling up our fast-growing life and non-life insurance businesses, making this a win-win for both of us.''
Vyvienne Wade, Gallagher Chairperson of Global Broking in Europe, Middle East, and Asia said ''We view India as a key and strategic market for the insurance industry and for Gallagher, given its scale and growth potential, and we see many interesting opportunities for further development of the business.''
Headquartered in Mumbai, with branches in Dehli, Kolkata and Bangalore, EGIBL offers general insurance solutions to clients across India. The business operates across four areas; corporate, affinity & association, reinsurance & global, and digital solutions.
This acquisition of the remaining shares of EGIBL will help enable a deeper integration with Gallagher’s global operations, helping scale up the business significantly. It will also give clients access to a larger suite of insurance products and services.
Simon Matson, Gallagher CEO of Global Broking in Europe, Middle East and Asia, said: “Gallagher has ambitious growth aspirations in Asia, and Edelweiss’s insurance broking business is a fantastic addition to our global team. Our colleagues in Edelweiss share our values, client focus and ambition for the future. We are looking forward to working with them even more closely and supporting them to deliver the very best of Gallagher to clients in India.”
The transaction is subject to receipt of regulatory and other appropriate approvals (including approval of the Insurance Regulatory and Development Authority of India) and fulfilment of the obligations/conditions prescribed in the agreement.Edelweiss Gallagher Insurance Brokers offers general insurance solutions to clients across India.