Bajaj Group is finally ending its 24-year strategic partnership with global insurer Allianz. Bajaj Finserv has signed share purchase agreements (SPAs) with Allianz SE to acquire the 26 per cent stake in their two joint ventures — Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC) — for a total consideration of Rs 24,180 crore.
Upon completion of the acquisition, the ownership structure of both insurance companies will stand as follows: a) Bajaj Finserv will increase its holding to 75.01 per cent in both BAGIC and BALIC, consolidating control with an additional 1.01 per cent stake acquisition, b) Bajaj Holdings and Investment Ltd will acquire 19.95 per cent stake, and c) Jamnalal Sons Pvt Ltd will hold 5.04 per cent stake. As a result, the Bajaj Group will collectively own 100 per cent of the equity in both BAGIC and BALIC post-acquisition. Management stated that the acquisition would be self-funded without external borrowings, leveraging Bajaj Group’s strong balance sheet.
Meanwhile, Allianz is planning to reinvest the proceeds into new opportunities in India.
No disruption in business
Even as Allianz exits, JM Financial said, “no disruption in business seen”. “This move eliminates the joint venture structure, offering the Bajaj group enhanced flexibility in strategic decision-making and operational direction. Bajaj Finserv is expected to recalibrate growth targets, with strong solvency position (+300 per cent against IRDAI floor of 150 per cent) of both insurers. Following the acquisition, Bajaj Finserv’s management has clarified that both BAGIC and BALIC will continue to be operated under the leadership of their respective boards of directors, without material changes in the board and top management. No immediate leadership changes are expected, and business operations will proceed as usual,” the brokerage firm added.
In terms of operational changes after the split, Nomura said, “With complete control, Bajaj Finserv plans to streamline decision-making, enhance branding, and pursue new growth areas such as pensions, NRI markets, and potential acquisitions. While IPO plans for BALIC and BAGIC remain under consideration, according to the company, the focus in the near term will be on a smooth transition, capital efficiency, and long-term profitability.” The transaction is expected to close by Jun’26 (subject to approvals).
What were the key takeaways from concall?
The management has highlighted that the deal will be self funded. While IRDAI has asked the larger insurers to propose a glide path to listing, post this transaction, JM Financial stated, BALIC and BAGIC will first rebrand themselves, before considering an IPO. “The management will also take a call on a comprehensive licence for the two companies, once the insurance amendment legislation is passed. The company clarified that Allianz RE is not a significant reinsurer for the two insurers and reinsurance agreements continue in a business-as-usual manner. The transaction is subject to approvals from the IRDAI and the CCI, which will determine the timeline for completion,” the JM Financial analysis report stated.
Given no new shareholder is coming in, the management, it said, is hopeful of the transaction getting completed within 15 months. Once 6.1 per cent of Allianz’s stake is transferred and it is no longer classified as a promoter, Allianz will be free to make its strategic decisions in India.
Nomura said, “Bajaj Finserv is focused on improving margins by cutting exposure to low-margin businesses and prioritizing high-margin segments over the next year, with BALIC expected to improve in 3-4 years while BAGIC remains a high-RoE player. According to the company, excess capital will be reviewed later with near-term investments in branding and re-branding.”