ADIA to invest Rs 665 cr in Aditya Birla Health Insurance for 9.99% stake

The transaction values the company at Rs 6,650 crore

The boards of Aditya Birla Capital and Aditya Birla Health Insurance have approved a proposal of capital infusion to the tune of Rs 665 crore in the later from a subsidiary of Abu Dhabi Investment Authority (ADIA), the company said in a late-night statement.

Aditya Birla Health Insurance is a 51:49 joint venture between Aditya Birla Capital Limited and Momentum Metropolitan Strategic Investments, a wholly owned subsidiary of South African based Momentum Metropolitan Holdings Limited (MMH).

Post the consummation of the transaction, which is subject to receipt of statutory and regulatory approvals, including the Insurance Regulatory and Development Authority of India (Irdai), ADIA will hold 9.99 per cent stake in Aditya Birla Health Insurance while Aditya Birla Capital and MMH will own 45.91 per cent and 44.10 per cent stake respectively in the company.

The transaction values the standalone health insurer at Rs 6,650 crore.

The company plans to use the proceeds of the investment to drive its growth in the health insurance market in India, which is highly underpenetrated thus providing a huge runway for growth to the company.

“In recent times health has become a key concern for all. With its differentiated Health - First model, ABHI is well positioned to address this concern, while also protecting health through insurance. An investment from ADIA underscores the strong and unique business model of ABHI and the franchise we have created,” said Vishakha Mulye, Chief Executive Officer of Aditya Birla Capital.

Hamad Shahwan Al Dhaheri, executive director of the Private Equities Department at ADIA, said, “We see significant potential in India’s health insurance sector as penetration levels increase, driven by higher awareness and broader economic growth. Aditya Birla Health Insurance has a strong management team, a wellness-first product offering and a differentiated distribution model. We look forward to partnering with Aditya Birla Capital and Momentum Metropolitan Holdings to support the next phase of ABHI’s growth.”

Aditya Birla is one of the five standalone health insurers in the non-life insurance space. The other four being Star Health & Allied Insurance, Niva Bupa Health Insurance, Care Health Insurance, and Manipal Cigna Health Insurance.

Aditya Birla Health Insurance has earned premiums to the tune of Rs 847.28 crore in the first four months of the current financial year (FY23), an increase of 71.86 per cent over the same period a year-ago. In FY22, the company earned Rs 1,740.62 crore in health premiums.