Zurich Insurance Group will buy a 51% stake in Kotak Mahindra General Insurance for £405.1 million, valuing the company at around £800 million. The deal, which is the single largest investment by a global strategic insurer in an Indian non-life insurer, marks the Swiss company’s return to India.
Zurich has signed a deal to acquire up to 70% stake in the Kotak Mahindra Bank unit - it intends to acquire an additional stake of up to 19% over time. Part of the consideration will go to Kotak Mahindra Bank for the sale of shares, while some of it will be allocated towards subscribing to the fresh issue of shares by the insurer.
Prior to the opening up of the insurance industry in 2000, Zurich had a mutual fund presence in India, which it sold to HDFC in 2003. Zurich had also been exploring partnerships to enter the non-life business during the liberalisation period and had set up a representative office, but these plans were later abandoned. More recently, Zurich had expressed interest in Reliance General Insurance during the Reliance Capital bankruptcy process but subsequently withdrew from the deal. Insurers have noted that Kotak Mahindra Bank has secured an excellent valuation for its non-life business. The deal values the general insurance business, which holds a market share of less than 0.5%, at more than one third of the market cap of New India Assurance, valued at £2.26 billion.