Kotak Mahindra Bank has agreed to buy out its foreign partner Old Mutual of South Africa in their life insurance joint venture, Kotak Mahindra Old Mutual Life Insurance.
The purchase price is INR12.97 billion (US$202 million) for Old Mutual's stake of 26%. This values the life insurer at INR48 billion. The acquisition means that the life insurer will become a wholly owned subsidiary of the Indian group.
"India is an exciting phase of its economic journey and the financial services sector, especially the insurance sector, is poised for significant growth. Kotak Life will continue to leverage this opportunity through its growing network of agency and other channel partners, including Kotak Mahindra Bank and group entities," Gaurang Shah, President of asset management, insurance and international business at Kotak Bank, said.
Old Mutual entered into the partnership with Kotak Life in 2001. According to data released by the IRDAI, the company reported new business premium of INR2,850 crore (US$443 million) for the financial year ended 31 March 2017, making it the fifth largest private insurance company. However, it has a market share of only 5% among private insurers. The top four command a combined share of 60%.
Old Mutual has also placed its 50% stake in its Chinese insurance joint venture, Old Mutual-Guodian Life Insurance, up for sale.