Burmans setto give upcontrol of Aviva Life, plans to sell 25% stake
The deal will see the family stake drop to 26% from 51% in Aviva Life Insurance Co.
MUMBAI: India’s billionaire Burman family is set to pare a quarter of its stake and give up control of a life insurance joint venture with UK’s Aviva Plc as part of its strategy to raise capital for the core consumer goods business, two people with direct knowledge of the matter said.
The deal will see the Burman’s family stake drop to 26% from the current 51% in Aviva Life Insurance Co., the people said, requesting anonymity. Aviva’s holding will rise to 74%, which will also give the foreign partner control of the life insurer.
“Going by the current actuarial valuations, the 25% stake to be augmented by Aviva Plc could be worth at least ₹1,500 crore. The business is growing and Aviva Life’s potential is huge given the niche markets and customer segments in which Aviva Life has a better grip than other life insurers in India,” one of the two people said.
“If all goes well, the deal is likely to be announced within two months,” this person said.
Confirming the likely transaction, Mohit Burman, chairman of Aviva Life Insurance Co. and a promoter and vice chairman of Dabur India said: “Aviva PLC has decided to increase stake from 49% to 74% when the regulations permit and the Burman family will continue to the be the JV partners.” Founded 137 years ago, the Burman family-owned
Dabur is known for brands including Vatika hair oil, Real fruit juices and Hajmola digestive candy among other fastmoving consumer goods. The family’s private holdings range from restaurants to home healthcare to life insurance.
The Burman family, which is actively seeking to grow its range of financial services businesses such as investment banking, mutual funds and insurance, has sharpened its focus on the FMCG business under Dabur India. This may see the family monetize stakes in certain businesses and mobilize the proceeds to expand the product range and boost Dabur’s FMCG businesses which has received a thrust since the coronavirus outbreak last year.
To be sure, the Burman family, among the top 20 richest in India with an estimated net worth of around $10 billion according to Forbes rich list, has been looking to monetize its stake in Aviva Life for quite a few months now and had also entered into stake-sale talks with e-commerce giant Flipkart’s co-founder Sachin Bansal.
The discussions, however, did not materialise over valuations and ownership terms, the second person said.
“Sachin Bansal of Navi Technologies held several rounds of discussions with the Burman family, negotiating the terms of the deal to buy the Burman family’s entire stake in Aviva Life,” the person said.
“This was last year. Discussions and negotiations with Sachin Bansal were over in March and we were not able to come to any conclusion,” Mohit Burman said.
“Neither Bansal nor Navi are currently in any talks to buy any stake,” said /how many?/officials at Navi Technologies.
Meanwhile, Aviva, the world’s fifth-largest life insurer, seems to be upbeat about India’s insurance business potential. In 2016, soon after the government lifted the foreign direct investment (FDI) limit in the insurance sector, Aviva picked an additional 23% stake in the life insurance venture from Dabur Invest Corp. for ₹940 crore. The deal valued Aviva Life at about ₹4,087 crore.