Mu­nich Re to buy ad­di­tional 23.37pc stake in Apollo Mu­nich

The Pak Banker - - COMPANIES/BOSS -

Ger­man rein­surer Mu­nich Re will pur­chase an ad­di­tional 23.37% stake in its joint ven­ture in­sur­ance busi­ness, Apollo Mu­nich Health In­sur­ance Co. Ltd, for Rs.163.5 crore in a trans­ac­tion that will value the com­pany at Rs.703 crore.

Mu­nich Re is hik­ing its stake in the health in­sur­ance firm nearly 10 months af­ter the Union govern­ment in­creased for­eign di­rect in­vest­ment (FDI) cap in the in­sur­ance sec­tor from 26% to 49%.

Mu­nich Re's move to in­crease share­hold­ing in the joint ven­ture mir- rors moves by other for­eign in­sur­ers to up their stake in the world's se­cond most pop­u­lous coun­try where in­sur­ance pen­e­tra­tion (3.9%) is well below the global av­er­age of 6.3%.

"In­dia's pop­u­la­tion struc­ture, in­creased life ex­pectancy and pos­i­tive eco­nomic de­vel­op­ment will usher in a steep rise in medium-term health­care spend­ing," Doris Höpke, mem­ber of Mu­nich Re's board said in a state­ment. "With the in­creased stake­hold­ing, we are strength­en­ing our po­si­tion for sus­tain­able and prof­itable growth in this re­gion."

Mu­nich Re will pur­chase an ad­di­tional stake from Apollo En­ergy Co. Ltd, a sub­sidiary of its joint ven­ture part­ner, Apollo Hospi­tals Group. The trans­ac­tion will bring down Apollo's stake to 51.1% in Apollo Mu­nich from ex­ist­ing 74.47%, ac­cord­ing to Mon­day's late night state­ment.

If the trans­ac­tion suc­cess­fully con­cludes, Mu­nich Re's share­hold­ing in Apollo Mu­nich will in­crease to 48.75%. Sub­ject to reg­u­la­tory ap­provals, the stake sale is ex­pected to close in the first quar­ter of 2016, Mu­nich Re added. About 0.2% of shares will be held by em­ploy­ees.

"We are de­lighted that Mu­nich Re has de­cided to in­crease their share­hold­ing in our in­sur­ance ven­ture. The trans­ac­tion high­lights the strong po­si­tion of Apollo Mu­nich as one of In­dia's lead­ing and most trusted stand- alone health in­sur­ance com­pany," Shobana Kami­neni, di­rec­tor at Apollo Mu­nich and ex­ec­u­tive vice- chair­per­son of Apollo Hospi­tals En­ter­prise Ltd, said in the state­ment. "It also demon­strates the com­mit­ment of both the part­ners to fur­ther ex­pand the op­er­a­tions of Apollo Mu­nich."

Apollo and Mu­nich Re joined hands in 2007 to start the health in­sur­ance com­pany for the In­dian mar­ket. In Novem­ber, Ja­pan's Nip­pon Life In­sur­ance Co. bought 23% in Re­liance Life In­sur­ance for Rs.2,265 crore, while Canada's Sun Life Fi­nan­cial Inc. spent Rs.1,664 crore for 23% ad­di­tional stake in Birla Sun Life In­sur­ance. AXA SA, the French part­ner of Bharti En­ter­prises, spent an undis­closed amount to in­crease its share­hold­ing in life in­sur­ance and gen­eral in­sur­ance joint ven­tures, Bharti AXA Life In­sur­ance and Bharti AXA Gen­eral In­sur­ance, re­spec­tively. UK-based Bupa Plc pur­chased 23% ad­di­tional stake in Max Bupa Health In­sur­ance Co. Ltd for Rs.191 crore in Novem­ber.

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