New Delhi: Encouraged by its expansive Indian presence and the government’s latest rules allowing 100% Foreign Direct Investment (FDI) in insurance, UK-based Prudential Plc has bought 75% of Bharti Life Insurance for Rs.3,500 crore, while realigning its existing business.
To do that, the company will have to trim its stake in ICICI Prudential Life Insurance from 22% to 10% to meet regulatory norms. Bharti was reportedly looking to sell a controlling stake in its insurance arm, earlier known as Bharti AXA Life Insurance. The company will retain a 25% stake in the company, while 360 ONE Asset Management, who held a 15% stake in the company, will exit its investment.
“We are delighted to welcome Prudential Plc as the controlling shareholder of Bharti Life, further accelerating its growth trajectory. Prudential’s experience and global scale, combined with Bharti’s strong track record, create a formidable alliance to tap into the immense potential of India’s life insurance sector,” Sunil Bharti Mittal, the Founder and Chairman of Bharti Enterprises, said.
What drove Prudential to Bharti
While ICICI Prudential remains highly profitable, the company is structurally tied to ICICI Bank’s captive customers. With this investment, Prudential can now expand its reach through India’s largest telecom operator, Bharti Airtel, using a strategy similar to Reliance Jio’s for its insurance and Mutual Fund businesses.
Prudential’s Motives
With this investment, Prudential is looking to strengthen its presence in the Indian insurance market, with the Bharti investment allowing it to scale up its investments through a pan-India telecom network without depending on a siloed set of captive customers.
Jio has been trying the same by partnering with BlackRock (for Mutual Funds) and Allianz (for insurance), with promising results so far.
Following the announcement, ICICI Prudential’s shares plunged nearly 9% to a two year low, as the market reacted to the news.
