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December 13, 2021

Edelweiss rejects Tokio Marine’s takeover bid for life insurance JV

Indian financial services firm Edelweiss has reportedly rejected Tokio Marine’s offer to acquire a controlling stake in their joint venture Edelweiss Tokio Life Insurance (ETLI).

Giving controlling stake to Japanese partner could hinder Edelweiss’ plans to list the insurance business within the next few years, the Economic Times reported citing sources.

Edelweiss owns a 51% stake in the life insurer while the remaining 49% stake is held by Tokio Marine.

Foreign direct investment (FDI) rules capped foreign ownership in the Indian insurance sector at 49%. Earlier this year, the government amended the rule to allow 74% foreign ownership in Indian insurers.

Notably, the ETLI JV agreement between Edelweiss and Tokio Marine expired in November 2021.

“We are engaged in discussions and will make a comment, if any, at an appropriate time,” Edelweiss Tokio Life Insurance chief strategy officer Jun Tokora was quoted by the publication as saying.

Several Indian insurance JV’s agreements give the foreign firm a right to raise stake as and when rules allowed.

However, there was no such agreement between Edelweiss and the Japanese firm.

“While Tokio Marine is keen to acquire a majority stake, given Edelweiss’s focus on Insurance businesses, it does not intend to dilute its existing majority stake in ETLI,” a source said.

“Over the last decade, ETLI has emerged as a high-quality business, making it the youngest and among the fastest-growing life insurance players. The India opportunity for the insurance sector is very compelling and we at Edelweiss are committed to growing these businesses,” said Rujan Panjwani, who leads the insurance cluster at Edelweiss.

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