Allianz, Jio Financial Said to Reach Initial Deal for India Joint Venture

Billionaire Mukesh Ambani’s Jio Financial Services Ltd., has reached a preliminary agreement with Allianz SE to form an insurance business in India, according to people familiar with the matter.

The move comes as the German insurer agreed earlier this week to sell its stake in joint ventures with Bajaj Finserv Ltd. Both Jio and Allianz are in the process of finalizing the ownership structure, said the people who asked not to be identified as the matter is confidential.

Allianz is aiming for a majority stake, but if that is not feasible, it is open to securinggovernance rights with a path to taking control in the future, according to one of the people. Jio and Allianz are seeking a tie-up for both health and general insurance. The agreement has yet to be finalized and is subject to change.

There was no immediate response from Jio Financial to a query sent by Bloomberg News, while a spokeswoman for Allianz declined comment.

Jio Financial, helmed by veteran banker K.V. Kamath, runs a shadow bank and has joined forces with BlackRock Inc. A foray in the insurance sector will help the Ambani unit in its quest to become a financial services behemoth.

India’s insurance penetration — the ratio of premiums to gross domestic product — at 3.7%, is well below Asian countries such as Japan, South Korea and Thailand, according to data from the local insurance regulator.

Photograph: Signage for Jio Financial Services Ltd. at the Bombay Stock Exchange. Photo credit: Dhiraj Singh/Bloomberg