Apax, Carlyle Reported Among Bidders for Indian Insurer Royal Sundaram

By and | November 15, 2017

Apax Partners and Carlyle Group LP are among suitors weighing bids for a stake in Indian insurer Royal Sundaram General Insurance Co., people with knowledge of the matter said.

The unit of Mumbai-listed Sundaram Finance Ltd. has started a process to sell a 49 percent stake, according to the people. Royal Sundaram has also drawn interest from other foreign private equity firms, the people said, asking not to be identified because the information is private. Any deal could fetch about $500 million, the people said.

Royal Sundaram is one of the few general insurers in India that doesn’t have a foreign shareholder. The September share sale of ICICI Lombard General Insurance Co., which made it the first publicly traded general insurer in the country, set a valuation benchmark that local rivals can reference as they pursue deals.

“Many Indian insurance companies are getting much higher valuations than international peers because of the better growth potential here,” Asutosh Kumar Mishra, a Mumbai-based analyst at Reliance Securities Ltd., said Wednesday by email. “Investors earlier were not ready to do deals due to ambiguity over valuation. Clarity on valuation has emerged.”

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Any deal will add to the $12.2 billion of acquisitions announced in the Indian financial industry this year, data compiled by Bloomberg show. Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, the people said.

Representatives for Apax, Carlyle and Royal Sundaram declined to comment.

Shares of Sundaram Finance have risen 63 percent in Mumbai trading this year through Tuesday, giving the company a market value of about $3.2 billion. Sundaram Finance, led by Managing Director T. T. Srinivasaraghavan, earned about 39 percent of its revenue and 6.7 percent of its pretax income from insurance in the year ended March, data compiled by Bloomberg show. It also runs operations including asset management, home loans and commercial vehicle finance.

Sundaram Finance owns 75.9 percent of Royal Sundaram, while the remainder is held by other Indian shareholders, according to its website. It was previously a joint venture with the U.K.’s Royal & Sun Alliance Insurance Plc.

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