One97 Communications, the parent of digital payments and financial services major Paytm has announced plans to infuse ₹950 crore in Paytm General Insurance Ltd (PGIL) in tranches, over a period of 10 years and to hold upfront equity stake of 74 per cent.
The proposal was approved by its board of directors in its meeting on May 20.
“Consequent to this investment, PGIL will become a subsidiary of the company,” One97 Communications said in a stock exchange filing on Saturday.
PGIL will seek a license for a general insurance business from the insurance regulator IRDAI.
“The investments to be made pursuant to the proposed transaction will be utilised for setting up the general insurance business of PGIL and scaling up its operations, besides maintaining the minimum solvency margin as prescribed under the applicable insurance laws and regulations,” it further said.
Post receipt of Certificate of Registration from IRDAI, PGIL would carry on general insurance business to offer a host of products under personal lines and commercial lines insurance including private car, two wheeler, health, property and liability insurance.
The announcement comes soon after Paytm’s proposed acquisition of Raheja QBE General Insurance was called off as it could not be completed within the agreed time period.
Paytm lnsuretech Pvt Ltd had, in July 2020, entered into a share purchase agreement to acquire 100 per cent of Raheja QBE General Insurance Company.
PGIL is an associate of the One97 Communications wherein 49 per cent of the equity share capital is held by the company and the remaining 51 per cent is held by VSS Holdings Pvt Ltd (VHPL), a company owned and controlled by Paytm’s MD and CEO Vijay Shekhar Sharma.
Post the proposed investment, PGIL would become a subsidiary of One97 Communications wherein the company would hold 74 per cent shareholding and the remaining 26 per cent stake will be held by VHPL.
“Both, the company and VHPL (that is the existing shareholders of PGIL) would make primary infusion of capital in PGIL at the same price,” One97 Communications said in the filing.
Vijay Shekhar Sharma re-appointed as MD & CEO
In a separate stock exchange filing, One97 Communications said its board of directors has approved the re-appointment of Vijay Shekhar Sharma as Managing Director and Chief Executive Officer of the company for a tenure of five years with effect from December 19, 2022 to December 18, 2027.
It has also approved the appointment of Madhur Deora, Chief Financial Officer as an Additional Director with effect from May 20, 2022. Further, the Board has also designated Deora as Whole-time Director and Chief Financial Officer of the company for a tenure of five years from May 20, 2022 to May 19, 2027.