UK-based CGU International Insurance Plc, which recently retracted from a proposed insurance venture with The Hindustan Times group to tie the knot with the Burmans of Dabur India Ltd, has decided to convert an existing joint venture with HT into a wholly-owned subsidiary.
HT-CGU Project Services Pvt Ltd was set up as a precursor to the partners' proposed joint insurance foray and was engaged in market research.
CGU, which had a minority stake in the venture, has now decided to buy out the media group's 51 per cent shareholding as well as the equity stake proposed to be given to a strategic investor, sources said.
They also said CGU has already filed for regulatory approvals which are expected by the middle of next month.
CGU International will invest around Rs 4.6 crore ($1 million) in the subsidiary's paid-up capital, which will be increased depending on the capital requirements of the business.
The new company will undertake market research, business and management consultancy including activities in connection with project management, planning organisation and management information.
A Dabur official said that this venture will have synergies with the existing insurance venture floated by the group's promoters as well as CGU, while clarifying that Dabur India is not a partner in the venture.
According to sources, HT-CGU Project Services was set up as a precursor to the proposed insurance venture between the two partners.
However, due to a financial crunch, the company could not be fully capitalised. HT was supposed to pump in around Rs 55 crore into the JV as its equity contribution.
This also coincided with a decision to make an investment of Rs 11 crore into its dotcom company, Go4i.com, which was wound up subsequently due to the failure of its revenue model.
"Since HT was unable to make fresh investments till late last year, it was granted a one month extension to decide on its business plan," sources said.
However, by then CGU and HT decided to part ways. After a few months, CGU decided to partner the promoters of Dabur for its insurance venture.
On Tuesday, CGU and its Indian partner filed an application with the Insurance Development and Regulatory Authority of India (IDRA) for a license to operate as an insurance company in the country. As per IDRA guidelines, CGU can pick up a maximum 26 per cent stake in the operating JV.
