Avantha Group partners Germany-based Ergo for life insurance foray

MUMBAI: Gautam Thapar-led Avantha Group is close to applying for a life insurance licence in partnership with Germany-based Munich Re group's direct insurance arm Ergo, said persons familiar with the development.

Ergo and Avantha were looking for a third partner to start a life insurance venture but have not found one. "They were looking to rope in a bank as a third partner but now they are going ahead with the plan," said an industry source close to the development. Ergo will own 26% stake in the company. The government is considering a proposal to increase the foreign direct investment limit in insurance to 49% from 26%.

This will mark the entry of Avantha Group into the financial services space. Ergo, which has been pursuing opportunities in India, was eyeing a host of Indian partners for venturing into this space. It had tied up with two-wheeler maker Hero Group in 2008, but later called off the JV.