Reliance Industries by agreeing to buy Bharti’s 74 per cent stake in its life insurance business Bharti-Axa has made its entry into the insurance sector. Bharti has exited the business in both the life and general insurance arms. The decision came as a next step of Bharti’s strategy of focusing in the energies and financial resources in businesses where it is making a deeper impact in India and overseas.
The company had entered into these joint ventures with the AXA group in 2006 and held 74 per cent stake in the ventures — Bharti AXA Life Insurance and Bharti AXA General Insurance. Bharti intends to use the proceeds of the sale towards other group businesses in India and abroad. Bharti, one of the leading telecom player in India and other parts of the world, has operations in 19 countries including 16 nations in Africa where it acquired Zain Telecom’s assets last year for over $10.7 billion. It has accumulated mobile subscriber base of over 190 million. The sale is subject to necessary approvals from the Insurance Regulatory and Development Authority, the Competition Commission of India and other relevant/applicable authorities.
According to the Reliance statement, RIL and its subsidiary Reliance Industrial Infrastructure (RIIL) would effectively own 57 per cent and 17 per cent, respectively, in both the insurance companies and would become AXA’s joint venture partners in India. AXA would retain its current 26 per cent shareholding and would continue to manage the day-to-day operations of both joint ventures. According to the existing regulations, the foreign partner in the insurance sector is allowed to have a maximum stake up to 26 per cent in the joint venture. The AXA group is a worldwide leader in insurance and asset management, with 214,000 employees serving 95 million clients.