Aviva to raise stake in Indian joint venture to 49 per cent over an 'attractive' local market

MUMBAI: Aviva, the UK’s largest insurer, said it is raising stake in its Indian joint venture to 49 per cent as the new law that allows higher foreign shareholding in insurance has made the local market “much more attractive”.

Aviva holds 26 per cent in Aviva India, a joint venture in which Dabur Invest Corporation holds the rest. The company did not disclose the deal size but industry sources said it could fetch the Burman family, promoters of Dabur Group, Rs 500-600 crore. Aviva’s move comes four months after the Parliament voted to increase the foreign investment limit in insurance ventures to 49 per cent from 26 per cent. It also comes exactly two years after reports said Aviva was contemplating to sell its stake in the Indian venture as it was unable to expand in a market where foreign ownership was restricted.

"The increase of foreign direct investment limit in India from 26 per cent to 49 per cent has made the Indian insurance market much more attractive," David McMillan, chief executive at Aviva Europe and India, said on Thursday. "We intend to increase our stake in the Aviva India joint venture business. We are finalising our application to do this and expect to complete it within the next six months."

Aviva is the fourth foreign insurer to have decided to raise stake in its local venture since amendments to the Insurance Act were passed in March. Earlier, French insurer Axa, Japan’s Tokio Marine and London-based Bupa had announced similar plans.

"With insurance penetration being a little over 3 per cent, India presents a huge opportunity for insurers to help more people," said Trevor Bull, MD and CEO at Aviva India. "We remain focused on providing the right solutions and support to a growing number of customers for their current and future needs, together with our partner Dabur, as we enter the next phase of our growth."