Mumbai:
Beleaguered Indian tycoon Anil Ambani is in talks to sell his group’s general insurance unit to a shadow lender, people familiar with the matter said, as he seeks to reduce debt.
Reliance Capital Ltd., controlled by Ambani, is discussing the contours of a deal to sell Mumbai-based Reliance General Insurance to Hero FinCorp. Ltd. the people said, asking not to be named as the information is not public. Negotiations are ongoing and may not result in a deal, the people said.
The plan to sell the fully-owned insurance unit is part of efforts by the former billionaire to cut his conglomerate’s liabilities after a debt-fueled expansion in the past decade led to the collapse of his telecom unit and placed other businesses under stress. The group has this month signed agreements to sell its radio station and stake in an asset management venture.
Reliance General Insurance may be valued at as much as 60 billion rupees ($860 million), The Economic Times reported on Thursday, citing unnamed sources. The company is a unit of Reliance Capital, Ambani’s financial services arm.
A spokesman at Reliance Capital declined to comment while a representative for Hero FinCorp didn’t respond to an email and phone calls seeking comment.
Reliance Capital earlier this month protested a three-step downgrade by Care Ratings to its credit score, saying the rating company didn’t fully factor in the impact of its plan to raise more than 100 billion rupees via asset sales and cut overall debt by more than half this financial year.
Earlier, the Insurance Regulatory and Development Authority has issued a three-year license in the “ Direct – Life & General” category to Hero Insurance Broking India Private Limited to conduct all types of General Insurance business, including health and life onsurance.
The robust insurance business of Sunil Kant Munjal-promoted Hero Enterprise, which was carried out by Hero Corporate Service Pvt Ltd, had migrated to Hero Broking.
“Our insurance vertical has grown new wings. This license gives us the capability to expand our physical footprint and grow our branch network on a sustainable basis. We will also be able to expand beyond automobile insurance and create fresh momentum in the new decade,’’ Shefali Munjal, Executive Director, Hero Corporate Service had said.
“Our distribution strengths lie across Tier 2, 3 and 4 cities and the trust that customers already have for the Hero brand, place us at the frontline in the battle to increase health penetration in India,’’ Ms Munjal added.
To grow the broking platform, Hero had strengthened its client servicing teams across India. The company’s IT backbone is also being strengthened to meet the customised needs of large corporates, SMEs, MME’s & other niche customer segments.
She had said the broking license would also help Hero offer certain super-specialised insurance products that are making their way into India.