Aditya Birla Group enters JV with SA firm

Aditya Birla Group enters JV with SA firm
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Highlights

Aditya Birla Group (ABG) has announced a joint venture with a South African insurance giant, MMI Holdings Ltd, to enter India\'s huge health insurance market.

Plans to enter India’s huge health insurance market

Kumara Mangalam BirlaJohannesburg: Aditya Birla Group (ABG) has announced a joint venture with a South African insurance giant, MMI Holdings Ltd, to enter India's huge health insurance market.

The group’s financial services division has signed a MoU with MMI holdings, in which the South African company will hold 26 per cent stake. It will be expended to 49 per cent once India's regulatory regime allows the proposal.

The transaction is subjected to execution of the respective legal agreements and obtaining the required regulatory approvals, SA firm said.

Ajay Srinivasan, CE, Financial Services of ABG said in a statement: "Health Insurance has low penetration levels in India. Given ABFSG's focus on building a retail presence across products, we foresee a huge potential to target the requirements of untapped customers and their families."

MMI, CEO Nicolaas Kruger said the company would initially target the "ideal" client base of 20 million in India's larger cities, where health insurance penetration was less than 3 per cent.

With 1.3 billion Rands available for acquisitions, Kruger said the company was comfortable putting in capital in line with its stake in the joint venture, but would not put a value to this deal as it was not an acquisition but a new venture.

"Each party will put in intellectual property and expertise and we will each contribute a relative portion to the share of capital required by the joint venture," Kruger said.

The company had set up an office in India three years ago to look at opportunities in the rising middle class in the country.

The joint venture decision had been buoyed by a recent report indicating that the rising Indian middle class would lead to greater demand for insurance products, growing from $66.4 billion in 2013 to an expected $350 to $400 billion in 2020.

MMI is the third South African insurer to enter India, with the country's two oldest insurance companies after Old Mutual and Sanlam.

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