 "Mitsui Sumitomo to raise stake in Chola MS to 40%, for Rs 883 cr")
Murugappa Group firm Tube Investments of India (TII) is to sell 14 per cent shareholding in Cholamandalam MS General Insurance Company to its Japanese joint venture partner, Mitsui Sumitomo Insurance (MSI) for Rs 882.7 crore.
This deal values the company at Rs 6,304.78 crore, that has put it among top three valued companies in the general insurance based on whatever public valuation details are available.
Once the transaction is completed, MSI will have 40 per cent stake and TII will have 60 per cent stake in the JV company. Currently, ICICI Lombard remains the highest valued general insurance company in the country.
Once the transaction is complete, MSI will have 40 per cent stake and TII 60 per cent in the JV company. The TII board of directors approved this on Friday, subject to regulatory approvals. It okayed the divestment of 418,32,798 equity shares of a Rs 10 face value each, for Rs 211 a share. TII and MSI have exchanged the necessary letters of offer and acceptance.
Several foreign insurance companies have raised stake in their respective JVs here in the recent past, after the central government raised the cap in this regard from 26 per cent to 49 per cent.
For instance, France-based AXA SA has increased its stake in the life insurance and general insurance JVs with Bharti Enterprises, Japanese firm Nippon Life has announced its decision to increase its stake in Reliance Life Insurance. Aegon has increased its stake in Aegon Life Insurance, a joint venture with Bennett, Coleman & Company to 49 per cent.
For hiking their stake, insurance companies need approval from Foreign Investment Promotion Board, Competition Commission of India and Insurance Regulatory and Development Authority of India. Law also stipulates that management control must rest with Indians at all times in the joint ventures.
