Shriram Group may dilute 5% each in life & non life biz

Chennai: Financial services conglomerate Shriram Group has started the process to identify buyers for stakes in both its insurance businesses — life and non-life. The transaction, in preliminary stages, is part of the group’s thinking to unlock cash to fund its aggressive growth plans.

Shriram Group and Sanlam are JV partners in the insurance business. “We are looking at dilution of 5% in each of the ventures,” said Shriram Group founder R Thyagarajan. “Our pre-tax profits are Rs 1,000 crore and valuation expectations are 25-30 times the profits. The market values insurance business quite differently now. Investors here are looking at price to premium, instead at what we have achieved. Our premium income is Rs 2,200 crore, and profits are Rs 1,000 crore, unlike other insurance

On the general insurance side, he said that industry was losing money on business verticals like health, crop, etc. “The industry is losing money and to cover up the loses, they end up fudging numbers. We have stayed away from loss-making portfolios including health and crop,” he said.

“We have received early interest from Premji Invest and a couple of PE investors. There is an issue with regards to Premji Invest picking stakes in us as they have recently picked up stake in SBI General insurance couple of months ago,” Thyagarajan said.

Source: Press Reader