Royal Sundaram may raise up to $100 mn

MUMBAI: Royal Sundaram General Insurance Co. Ltd, the insurance business of financial services group Sundaram Finance, is looking to raise equity capital up to $100 million, said three people aware of the development.

Royal Sundaram offers motor, health, personal accident, home and travel insurance to individual customers and offers specialised insurance products in fire, marine, engineering, liability and business interruption risks to commercial customers.

Royal Sundaram also offers products designed specifically for small and medium enterprises and rural customers.

“They have appointed investment bank JM Financial to advise them on the fund-raise. The company is looking to raise at least $100 million. It has started reaching out to relevant parties such as private equity investors and others,” said one of the three people cited above, requesting anonymity as the talks are private.

According to the second of the three cited above, the company intends to raise funds to bolster its solvency ratio and for business expansion.

“We do not comment on market speculation,” said a spokesperson for Royal Sundaram General Insurance in an email response to queries. An email sent to JM Financial on Friday was not answered.

Royal Sundaram was born as a joint venture between Sundaram Finance and Royal & SunAlliance Insurance Plc, UK. In July 2015, Sundaram Finance acquired the 26% equity holding from Royal & SunAlliance Insurance Plc.

In 2016-17, Royal Sundaram reported gross written premium of ₹2,188.7 crore, up 29% from the previous fiscal, out of which personal insurance policy premiums were ₹1,373 crore and commercial insurance premiums ₹831 crore. It reported a net profit of ₹43 crore in 2016-17, compared to a profit of ₹26.6 crore in the previous fiscal. The market share of the company stood at 1.73% among all general insurance firms.

In the last 3-4 years, several private equity investors have taken large bets on the Indian insurance sector.