Aviva plc, UK’s leading insurance, wealth and retirement business, has increased its holding in its Indian joint venture Aviva Life Insurance Company India Ltd (ALICIL) from 49 per cent to 74 per cent, giving the foreign partner control of the insurance firm.
The additional 25 per cent has been acquired from Dabur Invest Corp. The deal — whose value was not disclosed - would mean that the Burman family stake in the JV stands pared to 26 per cent from 51 per cent.
The latest transaction allows Aviva to become the majority shareholder, increasing its economic and operational control as it continues to transform the performance of the business.
Aviva has received approvals from the relevant competition and regulatory authorities.
It maybe recalled that Aviva Plc had in 2016 increased its holding in ALICIL to 49 per cent when it acquired a 23 per cent stake from the Dabur family.
Currently, the upper limit for foreign direct investment (FDI) in insurance companies is 74 per cent. In the case of insurance intermediaries, like brokerages, foreign investment is allowed upto 100 per cent.
In Budget 2020-21, Finance Minister Nirmala Sitharaman had announced raising the cap of FDI to 74 per cent for insurance companies with effect from August 2021.
The FDI cap in insurance companies had only been gradually increased by the government over the years from 26 per cent to 49 per cent and to 74 per cent. This gradual approach was intended to secure the interests of domestic insurance players.