Insurers tap private equity funds for capital

Rising interest among private equity players to acquire stakes in insurance companies in India may have solved the funding gap, without insurers needing to raise funds through a public listing.

Players like Singapore's GIC, KKR, Temasek, PremjiInvest and Carlyle are among firms which are looking to play a larger role in the insurance sector by acquiring stake in companies, reported MoneyControl.

For instance, Australia's IAG is looking to exit from its non-life venture, SBI General Insurance. Several private equity players are eyeing its 26% stake in the venture. State Bank of India, which was planning an initial public offering (IPO) of SBI General Insurance, said it has scrapped the IPO as it was not in need of capital. The head of a large consulting firm said, "It is a welcome change that the insurance regulator has allowed PEs to become promoters of companies. They come with a higher capacity to invest, and hence companies need not necessarily opt for an IPO."

The IRDAI in 2017 opened the doors for PE/VC firms to become promoters of insurance companies with a five-year lock-in period through a special purpose vehicle. The consultant added that two players, one life and one general insurer, were exploring a listing to raise capital. But these companies are now in talks with private equity firms for a capital infusion.

Earlier this year, private equity investor True North announced that it will buy Max India's 51% stake in Max Bupa Health Insurance. In 2018, a consortium comprising investor Rakesh Jhunjhunwala along with WestBridge AIF and Madison Capital acquired Star Health Insurance.

Source: Asia Insurance Review