Even as merger and acquisition(M&A) is gaining momentum in the Indian general insurance sector,Paytm,owned by One 97 Communications Ltd, along with its founder Vijay Shekhar Sharma,has expanded its foothold in the Indian general insurance sector by acquiring 100 per cent in Raheja QBE general insurance,a Mumbai-based private sector general insurer,for about Rs 568 crore.
"Raheja QBE is owned 51 per cent by Prism Johnson and 49 per cent by QBE Australia. Paytm is set to acquire both stakes and would own 100 per cent of the company," Paytm said in a statement.
The company, however, did not disclose the financial details of the transactions.
Effectively, with the deal, QBE,that had exited from several Asian markets earlier, has now decided to quit Indian markets Another Australian general insurance company IAG,had left Indian market, after selling its entire stake of 49 per cent in SBI General Insurance.
This acquisition of Raheja QBE general insurance is through QorQl Pvt. Ltd, a technology company with majority shareholding of Vijay Shekhar Sharma and remaining held by Paytm.
Paytm will use its large consumer base and merchant ecosystem to innovate insurance products and services to accelerate its reach and adoption.
Meanwhile,Prism Johnson Ltd, formerly Prism Cement Ltd,in a separate statement said its board has approved selling its entire 51 per cent stake in its general insurance joint venture Raheja QBE General Insurance Company Ltd (RQBE) to Paytm and Vijay Shekhar Sharma for about Rs 290 crore.
In a regulatory filing Prism Johnson said its board has approved divestment of 51 per cent of the paid-up equity share capital in RQBE, a material subsidiary, to QORQL Pvt Ltd for an aggregate consideration of Rs 289.68 crore.
The acquisition is subject to customary conditions, including, approval from the Insurance Regulatory and Development Authority of India (IRDAI).
Raheja QBE employees would continue working in Mumbai and other places, said the company.
"It is an important milestone in Paytm’s financial services journey, and we are very excited to welcome Raheja QBE General Insurance into the Paytm family. Its strong management team will help us accelerate our journey of taking insurance to the large population of India with the aim to create a tech-driven, multi-channel general insurance company with innovative and affordable insurance products,” said Paytm president Amit Nayyar.
“The potential of the insurance business is huge as the market is still under-penetrated in India. As a company, we fully rely and trust on our merchant partners, selling insurance products and augmenting their income options while driving penetration,'' he added.
"We are happy to announce the sale transaction of our entire 51 percent stake in Raheja QBE General Insurance Company Limited. Our decision to sell our stake in Raheja QBE is in line with our mission to create sustainable shareholder value and will enable us to focus our resources on our core businesses. This move will help the insurance business scale up to new heights by leveraging the large customer base and innovative products offered by Paytm," said Vijay Aggarwal, Managing Director Prism Johnson Ltd.
QBE Raheja general insurance has remained very conservative in growing its topline and have remained profitable ,though very small in amount. It has strong relationships with brokers, has eight offices and 40 staff, and wants to increase its number of staff to 150 over the next few years as it moves into direct motor and health businesses.
`It has to be seen whether the company with Paytm ownership will go for an aggressive growth in future. But it will be now converted into a tech drived company than a follow brick and mortar model and join the likes of ACKO, Digit and Navi General Insurance,who have entered the general insurance sector, with a promise to provide a technological edge to the segment., said analysts .
Starting as a corporate agency, Paytm had forayed into the business of selling insurance products with subsidiary Paytm Insurance Broking that secured its brokerage license from the IRDAI.in March this year.
The company through its broking outfit had planned to offer insurance products across four categories including auto,health, and life. Additionally, customers will also be able to avail policy management and claim settlement services at select merchant points, the company said.
The wholly owned subsidiary of Noida based One 97 Communications (PIBL) has already tied up with 20 insurance firms to roll out these products, with it exploring 30 other such tie-up opportunities, it said.
Early this year, DHFL General insurance,owned by Wadhawan Global Capital (WGC) promoted by Kapil Wadhawan,had changed hands and has started functioning as NAVI General Insurance promoted by Sachin Bansal,a technoogy enterpreneur known co-founding Flipkart.
In Januray,Navi Technology, Bansal's financial servives holding company, had acquired DHFL General Insurance from WGC for around Rs.100 crore and had received all necessary regulatory approvals agterwards from the insurance regulator IRDAI to make a new begining.
Currently, Kishore Biyani-promoted debt-laden Future Group is planning to exit both its general and life insurance businesses by selling off its controlling stakes in the two JVs it has with Generali Participations Netherlands N.V..