India-based ICICI Lombard General Insurance is engaged in talks to acquire a majority stake in Reliance General Insurance, a wholly-owned subsidiary of Reliance Capital, Moneycontrol reported citing an undisclosed source.
“This is not the first time when ICICI Lombard has started a discussion with Reliance General Insurance for buying a stake. A year back also, these companies had started discussion but then they were not able to proceed,” the publication quoted the source as saying.
ICICI Lombard has hired global professional services firm EY as the consultant to oversee the transaction. The consultant has begun due diligence, another source told the publication.
In the past, Reliance General Insurance tried to team up with a foreign company; however, its effort did not materialise.
In October 2017, Reliance sought Securities and Exchange Board of India (SEBI) approval for an IPO and secured the approval a month later. However, the SEBI’s permission for the IPO lapsed in November this year.
Reliance General Insurance’s book value was INR12.5bn ($178.4m) as of 31 March 2018. Its insurance’s gross written premium witnessed a 20% year-on-year increase in the September quarter to INR20.25bn ($289.02m).
The profit after tax surged to INR560m ($8m), an increase of 20% year-on-year.
Earlier this year, Reliance floated its health insurance business into a standalone firm, which operates under brand name Reliance Health Insurance.
ICICI Lombard General Insurance has been scouting opportunity to acquire companies in the health insurance space.
The company was one of the strongest contenders for the acquisition of Star Health and Allied Insurance; however, a consortium of WestBridge Capital and investor Rakesh Jhunjhunwala secured the deal.