Aditya Birla Capital Limited (ABCL), a company under the Aditya Birla Group, announced on Monday the sale of its entire stake in Aditya Birla Insurance Brokers Limited (ABIBL), which is a non-material subsidiary of the Company.
In an exchange filing, the company said, the sale involves the transfer of all 25.65 lakh shares of Rs. 10/- each, representing 50.002% of the issued and paid-up share capital of ABIBL, to Edme Services Private Ltd, which is part of the Samara Capital Group and an affiliate of Samara Alternate Investment Fund. Infocyber India Private Limited, the other shareholder of ABIBL, will also sell its 49.998% stake in the company to Edme Services Private Ltd.
On 19 December 2022 Mint first broke that Samara Capital was the frontrunner to buy the insurance broking unit of Aditya Birla Capital Ltd, on the condition of anonymity.
The total enterprise value of the transaction is set at Rs. 455 crore on a cash-free and debt-free basis, with closing adjustments subject to the terms, set out in the share purchase agreement.
Under the terms of the agreement, ABCL and Infocyber India Private Limited may receive additional consideration after 5 years from the closing of the transaction, subject to certain conditions. The Company is entitled to receive 50.002% of any consideration (including additional consideration) paid by Edme Services in lieu of its acquisition of 100% of ABIBL’s issued and paid-up share capital in accordance with the SPA, the press release said.
“The Proposed Transaction is subject to the approval of Insurance Regulatory and Development Authority of India (‘IRDAI’) and other statutory/regulatory approvals and other conditions under the SPA. As per reasonable estimates, the Proposed Transaction is expected to be completed within 120 to 180 days from the execution of the SPA”, the statement said.
ABIBL contributed Rs. 684.52 Crores to the Company’s consolidated revenue in FY 2021-22, and net worth (50.002% share) contributed Rs. 64.85 Crores, totaling 3.08% and 0.42% of the Company’s consolidated revenue and net worth, respectively.
The sale of Aditya Birla Insurance Brokers is part of parent Aditya Birla Capital’s strategy to reorganize its financial services operations and divest from businesses that have limited growth potential under its management. Aditya Birla Capital invited bids for the insurance broker about six months ago.
Aditya Birla’s insurance broking firm is one of India’s largest in selling both life and non-life policies.
Motor insurance is its main contributor to premium placement. Through its 350-odd employees, the company provides insurance broking, reinsurance solutions and advisory services to companies and individuals.
The latest deal will be Samara’s second transaction with Aditya Birla Group. Samara and Amazon are partners in Witzig Advisory Services Pvt. Ltd, an investment vehicle which acquired More Retail Pvt. Ltd from Aditya Birla Group in September 2018.
According to an industry expert, the new management of Aditya Birla Capital under chief executive officer Vishakha Mulye is looking to restructure the company and exit some of the businesses where scalability is an issue.
Mulye, according to the industry expert, after taking charge as the chief executive in April, has been working on building synergies within the group to facilitate the cross-selling of financial products to customers of Aditya Birla group firms.
Samara has invested at least $1 billion since its inception in 2007.
