Zurich Insurance Company will purchase the majority of Kotak Mahindra Bank’s subsidiary Kotak Mahindra General Insurance Company for a sum of Rs 4,051 crore.
The agreements between Zurich Insurance, Kotak Mahindra Bank, and Kotak Mahindra General Insurance have been finalised. Under the terms of the agreement, Zurich would invest approximately Rs 4,051 crore to acquire a 51% interest in Kotak General Insurance. The bank said in a stock exchange statement that this investment will consist of both share purchases and new capital infusion.
Zurich plans to purchase a further 19% of the company within three years of the first transaction.
According to Kotak, Zurich’s investment is the biggest one made by a global strategic insurer in an Indian non-life insurer.
Subject to customary closing adjustments, the proposed Transaction values Kotak General Insurance at around Rs. 7,943 crore on a post-money valuation.
According to the bank, the deal is probably going to be finished by June 30, 2024.
Following the announcement, Kotak Mahindra Bank shares soared; at 9:45 a.m. Mumbai trade, they were up 1.8% at Rs 1,754.70 rupees. The BSE Sensex as a whole rose 0.9%.
After Zurich buys out Kotak General Insurance’s 51% ownership, the company will no longer be a bank subsidiary.
Zurich’s unique worldwide strengths in digital assets, B2B, and B2C formats, along with the Kotak Mahindra Group’s pan-Indian ‘phygital’ distribution reach, have the potential to have a revolutionary ‘digical’ influence on the Kotak General Insurance franchise. According to Dipak Gupta, MD & CEO of Kotak Mahindra Bank, “this will facilitate efficient and rapid innovation in the Indian general insurance space.”
According to Tulsi Naidu, CEO of Zurich Insurance’s Asia Pacific region, India is one of the biggest and most promising markets in the world. According to Naidu, the Indian general insurance market will see a significant influx of innovation, knowledge, and first-rate customer experiences thanks to the Kotak Mahindra Group’s superior franchise and financial services expertise, Zurich’s broad distribution experience, and its excellent offerings in both retail and commercial insurance.
Previously, Kotak Mahindra Bank Ltd.’s shares dropped and analysts and top management were taken aback when The Reserve Bank of India supported a foreigner with less expertise in the nation to lead the bank.
Ashok Vaswani was chosen by Kotak to be its chief executive officer, a decision that was unusual for Indian banking. According to those acquainted with the situation, investment banker K.V.S. Manian was considered the front-runner, which startled and disappointed some top managers. Vaswani was selected by The Reserve Bank of India, which authorises all top bank appointments, after the bank’s board submitted both names for review.