Japanese insurance major Tokio Marine Asia Pte Ltd (TM Asia) has acquired 49 per cent stake in the insurance arm IFFCO-Tokio, from its Indian promoters, fertiliser cooperative Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Indian Potash Ltd (IPL).
The acquisition came following IFFCO's 21.64 per cent stake divestment in its insurance arm and another 1.36 per cent stake sale by IPL to TM Asia, the joint venture (JV) partner.
The Japanese insurance major paid a total consideration of Rs 2,350 cr to take up its stake to 49 per cent, almost 17 years after they entered the JV as minority stakeholders (26 per cent), at a valuation of Rs 11,000 crore for the general insurance business in India.
“Tokio Marine Japan and we have the same mindset of reaching insurance to those who are yet unreached (sic) and need these financial securities the most,” said Dr U.S. Awasthi, managing director, IFFCO, highlighting the large farmers' cooperative's core value of serving Indian farmers, adding that TM Asia “shareholding has never been our guiding principle and they have always been equal partner and our technical advisers in insurance space”.
IFFCO and IPL have already received Rs 2,380.4 crore and Rs 249.6 crore in consideration of parting with their shares.
Speaking at the announcement in Delhi, Arthur Lee, CEO, Tokio Marine Asia said, “This was a long time coming for us. From starting with farmers insurance, we are providing insurance to a cross-section of a growing Indian population.”
“This new arrangement will make make it a more beneficial operation for us in India,” Lee said. IFFCO-Tokio General Insurance (ITGI) has a significant presence in providing insurance in rural markets and also a growing revenue share from urban consumers.
Lately the company has geared up a majority of its revenue share from new business streams like motor insurance, health insurance and term insurance products.
For rural markets, ITGI is working on providing insurance on e-platforms to reduce cost and improve coverage as well as bringing in cattle insurance and other new products geared for aiding farmers.
