Royal Sundaram General Insurance Co. Ltd, the insurance business of financial services group Sundaram Finance, is looking to raise equity capital up to $100 million, said three people aware of the development.
Royal Sundaram offers motor, health, personal accident, home and travel insurance to individual customers and offers specialized insurance products in fire, marine, engineering, liability and business interruption risks to commercial customers.
Royal Sundaram also offers products designed specifically for small and medium enterprises and rural customers.
“They have appointed investment bank JM Financial to advise them on the fund-raise. The company is looking to raise at least $100 million. It has started reaching out to relevant parties such as private equity investors and others,” said one of the three people cited above, requesting anonymity as the talks are private.
According to the second of the three cited above, the company intends to raise funds to bolster its solvency ratio and for business expansion.
“We do not comment on market speculation,” said a spokesperson for Royal Sundaram General Insurance in an email response to queries.
An email sent to JM Financial on Friday was not answered.
Royal Sundaram was born as a joint venture between Sundaram Finance and Royal & SunAlliance Insurance Plc, UK.
In July 2015, Sundaram Finance acquired the 26% equity holding from Royal & SunAlliance Insurance Plc.
In 2016-17, Royal Sundaram reported gross written premium of Rs2,188.7 crore, up 29% from the previous financial year, out of which personal insurance policy premiums were Rs1,373 crore and commercial insurance premiums Rs831 crore.
The company reported a net profit of Rs43 crore in 2016-17, compared to a profit of Rs26.6 crore in the previous fiscal. The market share of the company stood at 1.73% among all general insurance firms.
In the last 3-4 years, several private equity investors have taken large bets on the Indian insurance sector, both in the life and non-life spaces.
In May, a group of investors including private equity major Warburg Pincus picked up a 12.18% stake in IPO-bound ICICI Lombard General Insurance Co. Ltd for around $383 million.
Earlier in April, Religare Enterprises Ltd announced the sale of its 80% stake in Religare Health Insurance Co. Ltd (RHI) to a group of investors led by True North, valuing the health insurance business at Rs1,300 crore. Apart from True North, other investors in the consortium are Aditya Parekh-led private equity firm Faering Capital and Gaurav Dalmia.
In December 2016, State Bank of India (SBI) sold a 3.9% stake in its subsidiary SBI Life Insurance Co. Ltd to American private equity firm KKR and Singapore-based Temasek for Rs1,794 crore.
Also last year, private equity firms Apis Partners and ICICI Venture acquired a significant minority stake in health insurance company Star Health and Allied Insurance Co. Ltd for an undisclosed amount.
Star Health had previously raised funds from Sequoia Capital and Tata Capital Growth Fund.
On 4 October, Times of India reported that Star Health and Allied Insurance, has kicked off a sale process seeking a valuation of $900 million to $1 billion.
Source: Mint