Private equity giant Warburg Pincus Llc has emerged as the front runner to buy Legal and General Group Plc.’s 26% stake in IndiaFirst Life Insurance Co. Ltd, two people aware of the development said.
According to them, the transaction is valued at close to $150 million but the final figure may change as the talks are going on. IndiaFirst is a joint venture between Bank of Baroda, which owns a 44% stake, Andhra Bank, which holds 30%, and Legal and General. “Warburg has made the highest offer among all the bidders and negotiations are progressing well,” said the first person.
Mint reported on 6 February that Warburg Pincus, along with Prem Watsa’s Fairfax Financial Holdings Ltd, was shortlisted for the stake sale which is being managed by Ambit Corporate Finance as the transaction adviser. “A few other private equity funds have explored the deal, including TPG Capital, but they have not given a binding offer,” said the first person cited above.
Spokespersons for Warburg Pincus and Bank of Baroda declined to comment, while emails sent to Andhra Bank and Legal and General Group remained unanswered as of press time on Monday.
IndiaFirst Life’s product range covers protection (term insurance), savings, education and retirement. It has a range of group insurance products in the form of credit, life, term and employee liability. In FY18, the company’s net profit rose 46% to Rs51 crore, making it the fourth consecutive year of profits for the company since its inception in 2009.
The potential transaction underlines the growing interest of private equity funds in the financial services sector, especially the insurance sector, which has seen a flurry of deal activity in recent months, driven by successful listing of leading insurance firms. Mint reported in August last year that Star Health and Allied Insurance Co. Ltd, which focuses on health, travel and accident insurance, is looking to raise up to Rs3,000 crore in funding through primary and secondary stake sales. Mint reported on 10 May that Warburg Pincus, along with Blackstone, has separately entered negotiations to invest in Max Financial Services Ltd for a minority stake. Max Financial Services, led by billionaire Analjit Singh, is raising money to finance a potential acquisition by its life insurance unit Max Life Insurance Co. Ltd of a substantial stake in IDBI Federal Life Insurance.
2017 saw the public listing of the country’s two largest life insurers—SBI Life Insurance Co. Ltd and HDFC Standard Life Insurance Co. Ltd. Altogether, four insurance firms tapped the primary markets last year. The others were General Insurance Corp. of India and New India Assurance Co. Ltd.
Source: Mint