Chennai, March 9 (IANS) City-based Sundaram Finance Ltd is awaiting approval from the insurance regulator for completing a 26 percent stake purchase from Britan's RSA Group for Rs.450 crore in its general insurance joint venture, said a top official.
Sundaram Finance has already secured permission from the Reserve Bank of India (RBI) to hold more than 50 percent stake in the general insurance venture for three years.
"We have applied to IRDAI (Insurance Regulatory and Development Authority of India) for sanction to acquire 26 percent stake from RSA Group in Royal Sundaram Alliance Insurance. The sanction is awaited," Sundaram Finance managing director T.T. Srinivasaraghavan told IANS here on Monday.
Only after IRDAI's nod would the company decide on renaming the company to reflect the revised stake-holding pattern, he said.
To a query whether the new name would be Sundaram General Insurance, he said it was not possible to say anything on that now.
He said Sundaram Finance had got the permission from RBI to hold more than 50 percent stake in the insurance outfit prior to the public announcement of stake-change.
As per RBI regulations, Non-Banking Financial Companies cannot hold more than 50 percent stake in insurance ventures.
Sundaram Finance holds 49.90 percent in the Royal Sundaram Alliance, a general insurance company.
Following the acquisition, Sundaram Finance's holding in the Royal Sundaram Alliance would go up to 75.90 percent.
The rest will be held by the associates of Sundaram Finance.
Questioned about the change in management in the general insurance company and the continuation of Ajay Bimbhet as managing director, Srinivasaraghavan said there was time for Sundaram Finance board to decide on those issues.
According to sources, Bhimbet's term is coming to an end next month.
Bhimbet has also applied to RBI for a licence to float a small finance bank with some partners.
What is sure is that the insurance company's board composition would undergo a change as RSA nominees would not be there after the stake acquisition.
Last month, Sundaram Finance announced its decision to acquire 26 percent stake held by Britain's RSA Group in Royal Sundaram Alliance for Rs.450 crore.
The overall enterprise value for the Rs.1,437-crore premium general insurer works out to around Rs.1,731 crore.
In its statement, RSA Group said it expects to receive cash consideration of approximately 46 million euros ($52.4 million), and the transaction is expected to result in a gain on sale of approximately 16 million euros ($18.2 million).
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