Bharti to exit from financial services joint venture with AXAJune 10th, 2011 - 11:53 pm ICT by IANS
New Delhi, June 10 (IANS) Bharti Enterprises, a subsidiary of Bharti Group, Friday said it had decided to sell its entire stake in the life and general insurance subsidiary France’s AXA to Mukesh Ambani-led Reliance Industries limited (RIL).
“The decision is in line with Bharti’s strategy of focusing its energies and financial resources in businesses where it is making a deeper impact both in India and overseas,” the company said in a statement.
“Currently, the financial services ventures do not fit into Bharti’s long term growth plans. Bharti intends to use the proceeds from selling off its interests in these joint ventures towards other group businesses in India and abroad,” it added.
The group had entered into these joint ventures with the AXA Group in 2006 and held 74 percent stake in both these ventures - Bharti AXA life insurance and Bharti AXA general insurance.
On the other hand, Reliance Industries have been on the look out for acquisition in the financial services space post the termination of a non-compete agreement with the Anil Dhirubhai Ambani group.
On completion of the proposed transaction, RIL and Reliance Industrial Infrastructure Limited (RIIL) would effectively own 57 percent and 17 percent in both insurance companies and would become AXA’s joint ventures partners in India.
AXA would retain its current 26 percent shareholding and would continue to manage the day to day operations of the joint ventures.
The proposed agreement contemplates an option by which AXA would acquire from RIL and RIIL upto 24 percent shareholding in both the insurance companies in accordance with the applicable regulations as and when the foreign direct investment regulations permit such holding by AXA.
Upon exercise of such option, RIL will effectively own 45 percent, RIIL will effectively own 5 percent and AXA the balance 50 percent in both the insurance companies.
“RIL and AXA will join forces to create market leading life and general insurance businesses in India by leveraging their respective strengths and expertise,” said RIL in a statement.
In financial year 2011, Bharti AXA Life collected premiums of Rs.7.9 billion and Bharti AXA general insurance collected gross direct premiums of Rs.5.5 billion.
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