ICICI Venture, Morgan Stanley PE invest Rs 525 cr in Magma HDI

Mumbai: Magma HDI General Insurance Limited (Magma HDI) has received about Rs525 crore from ICICI Venture and Morgan Stanley Private Equity Asia along with the Cyza Chem Pvt Ltd (a Poonawalla Group Company). The transaction of Rs 525 crore includes a primary capital raise of Rs 250 crore, said a company statement.

Fresh capital infusion of Rs. 250 crore will provide growth capital to meet the needs of the expanding distribution capabilities of the company.

The secondary sale of Rs 275 crore enables Magma Fincorp NSE 0.12 % Limited and its group companies in complying with the Reserve Bank of India’s guidelines for ownership of stake in insurance companies. Ambit Private Limited is the exclusive financial advisor to the transaction.

“ The growth capital which the investors bring on board will enable us to expand the business and explore new opportunities. The insurance sector is poised to see exponential growth given the low penetration and the trigger of the pandemic which has led people to look at insurance as protection,” said Rajive Kumaraswami, Managing Director & Chief Executive Officer, Magma HDI General Insurance.

“We are delighted to continue our support as shareholders of Magma HDI and I see huge potential in the growth of Magma HDI which is a young and fast growing company. We are confident that it can reach its full potential in next few years,” said Adar Poonawalla, Chief Executive Officer, Serum Institute of India. In February, the Pune-based vaccine major Poonawalla Group agreed to acquire a controlling 60 per cent stake in Magma Fincorp by subscribing to a Rs3,456-crore preferential issue. Magma Fincorp operates in SME finance, retail finance, housing finance and general insurance business.

“General Insurance sector in India is poised for a structural growth phase, and we believe that Magma HDI is well-placed to tap this opportunity given its management strength, careful product selection, prudent underwriting, and distribution network," said Nirav Mehta, Managing Director of Morgan Stanley Private Equity Asia.

Magma HDI General Insurance has been one of the fastest growing GI companies, with a CAGR of 45% in the last three years. The company’s solvency stands at 1.81 times as on 31 December 2020, against the required regulatory solvency of 1.5 times, the statement said.

For the 9MFY21 period ending Dec 20, the company recorded a Profit After Tax of Rs 22.3 crore on a Gross Written Premium (GWP) of Rs 911.2 crore compared to Rs 7.3 crore PAT on a GWP of Rs 948.5 crore, same period last year. As of Dec 20, the investment book stands at Rs 2,881 crore.

Source: The Economic Times

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