Kotak Mahindra Bank will sell majority stake in subsidiary Kotak Mahindra General Insurance Company to Zurich Insurance Company for Rs 4,051 crore.
Kotak Mahindra Bank, Kotak Mahindra General Insurance and Zurich Insurance have finalised agreements for a deal in which Zurich will invest around Rs 4,051 crore to obtain a 51% stake in Kotak General Insurance. This investment will be a combination of fresh capital infusion and share purchase, the bank said in a stock exchange filing.
Zurich will buy an additional stake of 19% within a period of three years from its initial acquisition.
The investment from Zurich represents the single largest investment by a global strategic insurer in an Indian non-life insurer, Kotak said.
The proposed Transaction values Kotak General Insurance at approximately Rs. 7,943 crore on a post-money valuation, subject to customary closing adjustments.
The deal is likely to be completed by June 30, 2024, the bank said.
Shares of Kotak Mahindra Bank surged following the news and they were up 1.8% at Rs 1,754.70 rupees at 9:45 am in Mumbai trading. The broader BSE Sensex was up 0.9%.
Once Zurich acquires the 51% shareholding in Kotak General Insurance, it will cease to be a subsidiary of the bank.
"Kotak Mahindra Group's pan-India 'phygital' distribution presence and Zurich's distinct global capabilities in digital assets, B2B and B2C formats have the potential to create a transformational 'digical' impact for the Kotak General Insurance franchise. This will facilitate efficient and rapid innovation in the Indian general insurance space," said Dipak Gupta, MD & CEO, Kotak Mahindra Bank.
Tulsi Naidu, CEO Asia Pacific at Zurich Insurance, said India represents one of the world's most significant markets with considerable potential. Naidu said the Kotak Mahindra Group's high-quality franchise and financial services expertise, along with Zurich's extensive distribution experience and top-notch offerings in both retail and commercial insurance will usher in robust innovation, expertise and exceptional customer experiences within the Indian general insurance sector.