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Deal time in insurance
Stocks of Max India and Reliance Capital were in the news after these companies sold some stake in their insurance subsidiaries to foreign partners. These deals are one of several in the last year, after the government increased the FDI cap to 49 per cent from 26 per cent.
Last week, Nippon Life bought 23 per cent stake in Reliance Life Insurance (part of Reliance Capital) pushing up its holding to 49 per cent. Also, Max India sold 23 per cent in Max Bupa — its health insurance business — to its foreign JV partner Bupa Plc.
These deals highlight investor interest in the insurance space and should help these companies unlock value in their subsidiaries. About 55-80 per cent of these companies’ fair value comes from their insurance businesses. The consideration of both the deals was in line with past deals in the life and non-life insurance space.
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