Kotak Mahindra to buy out Old Mutual in insurance JV

MUMBAI: Kotak Mahindra Bank Ltd will acquire the 26% stake owned by its joint venture partner Old Mutual Plc in Kotak Mahindra Old Mutual Life Insurance Ltd for ₹1,292.7 crore, the private sector lender said in an exchange filing on Friday. After the buyout, Kotak Mahindra Life Insurance will become a 100% unit of Kotak Mahindra Bank.

Kotak Mahindra Old Mutual Life, which collected a total firstyear premium of ₹2,849.74 crore in 2016-17, is ranked sixth among 24 life insurers in the industry in terms of premium collected.

The deal is subject to regulatory approval from Reserve Bank of India, Securities and Exchange Board of India and Insurance Regulatory and Development Authority of India and may take 3-4 months to be finalised, said a spokesperson at Kotak Mahindra Life Insurance. “The bank will fund the acquisition either through internal accruals or from the capital that it has proposed to raise this financial year. The bank’s board has recently passed a resolution to raise capital by way of selling up to 62 million shares and at the current price this may mean a capital raise of ₹5,000-6,000 crore.”

Old Mutual’s exit comes at a time when the insurance industry is going through a phase of consolidation that began last September with ICICI Prudential Life Insurance Co Ltd’s ₹6,000crore new share sale.