RSA MAY BE RELIANCE GEN PARTNER
Anirudh Laskar and Baiju Kalesh, Mumbai
Chennai-based financial services firm Sundaram Finance Group will exit its general insurance venture Royal Sundaram Alliance Insurance Co. Ltd, with its British partner RSA Insurance Group Plc buying out its 74 percent stake, according to two persons familiar with the deal.
RSA will then merge the company with Reliance General Insurance Co. Ltd to create a new firm and take a 26 percent stake in it, the two added, asking not to be identified.
"The process may take about a month," said one of the two.
Once Sundaram Finance exits the partnership in Royal Sundaram General, RSA will have to acquire the entire stake in the joint venture. But Indian regulations do not allow a foreign company to own more than 26 percent of an insurance firm. RSA will, therefore, merge the business (which is currently under Royal Sundaram General) with Reliance General, and the combined entity will transfer a 26 percent stake to RSA.
According to a third person familiar with the transaction who too did not want to be identified, Reliance General is valued at $500 million (Rs 2,255 crore). At this valuation, a 26 percent stake would be worth at least Rs 600 crore.