Canadian firm hikes stake in Birla Sun Life to 49%

Sun Life Financial of Canada has increased its stake in Birla Sun Life Insurance (BSLI), part of the $41 billion Indian multinational Aditya Birla Group, from 26 per cent to 49 per cent with an investment of Rs1,664 crore.

Aditya Birla Nuvo Ltd (ABNL) has entered into an agreement with the Canadian insurance major to sell 437 million equity shares, constituting 23 per cent of the issued and paid-up equity share capital of BSLI. On completion of the transaction, Sun Life's stake in BSLI will increase from the current 26 per cent to 49 per cent, the maximum permissible foreign direct investment as per the Insurance Amendment Act, while ABNL will continue to hold 51 per cent. The 23 per cent stake sale will fetch ABNL Rs1,664 crore, valuing BSLI at Rs7,235 crore.

Kumar Mangalam Birla, chairman, ABNL and BSLI, said, ''Both Sun Life and ABNL have closely partnered in building the life insurance business to its current scale, investing heavily in both capital and resources. I am confident that this move will only strengthen our long standing partnership and help us realise our vision of being a top 3 private life insurer in India.''

Last week, Nippon Life Insurance (NLI) of Japan had agreed to increase its stake in Reliance Life Insurance (RLIC), part of Reliance Capital of the Anil Ambani group, from the existing 26 per cent to 49 per cent for Rs2,265 crore. The 23 per cent stake purchase pegs Reliance Life Insurance's valuation at around Rs10,000 crore.

Foreign insurers are slowly stepping up their investments in India. Standard Life, which has an insurance joint venture with HDFC, is seeking to raise its stake in the JV to 35 per cent from 26 per cent. BNP Paribas Cardif, life insurance joint venture partner of State Bank of India is also in talks to lift its stake to 36 per cent.

ICICI Bank, India's biggest private sector bank, recently agreed to sell a 6 per cent stake in ICICI Prudential Life Insurance Company in two separate deals to billionaire Azim Premji and Singapore state investor Temasek for Rs1,950 crore, which put the valuation of the company at Rs32,500 crore.

ICICI Bank recently announced that it was selling 9 per cent stake in its general insurance arm, ICICI Lombard, to Fairfax Financial Holdings, promoted by Canada-based NRI Prem Watsa. The sale will bring down the bank's stake in the insurance venture to 64 per cent and bring in Rs1,550 crore.

Dean Connor, president and CEO of Sun Life Financial, said, ''Increasing our ownership in BSLI … in partnership with … Aditya Birla Group, in the world's second most populous country with strong growth prospects, is exactly on strategy and supports our aspirations for Sun Life Asia as one of our four pillars of growth.''