Allianz can raise stake in Bajaj Ventures

Mumbai: The Munich-based Allianz SE has the option to raise its equity in the general insurance company to 50 per cent and life insurance to 74 per cent, when the Government hikes the permissible foreign direct investment limit from the current 26 per cent. Bajaj Auto and the German Allianz currently hold 74 per cent and 26 per cent stake, respectively, in both ventures. The purchase price of the shares will be determined by the timing of exercising the call and put options, as per the joint venture agreement filed with IRDA.

For options exercised until April 22, 2016, in the non-life insurance venture (Bajaj Allianz General Insurance), Allianz would have to pay Rs 10 per share and interest compounded at 16 per cent per annum from April 23, 2001. For options exercised after April 22, 2016, Allianz will have to pay the highest among three methods - the earlier mentioned pricing formula, price of the stock if the venture is listed or a fair value of the company as determined by a mutually accepted accounting firm.

As regards Bajaj Allianz Life Insurance, each share will initially cost Rs 5.42 in addition to an interest of 16 per cent per annum from July 31, 2001 to the date of payment. If the call option is exercised after July 30, 2016, Allianz will have to use the same method as for the non-life insurance company.