Paytm, owned by One97 Communications Ltd, and its founder Vijay Shekhar Sharma have agreed to totally purchase basic insurer Raheja QBE Common Insurance coverage Firm Ltd for ₹568 crore in a bid to speed up the launch of its personal insurance coverage enterprise in 24-30 months.
The deal will enable Paytm, at present a distributor of insurance coverage merchandise, to broaden into creating and advertising its personal insurance coverage merchandise.
The workforce at Raheja QBE will stay unaffected by the deal, in accordance with an announcement by Paytm.
Raheja QBE is owned 51% by constructing supplies firm, Prism Johnson Ltd, and 49% by Australian insurer, QBE Australia. Prism Johnson, previously Prism Cement Ltd., is a part of the Rajan Raheja group.
“It is a crucial milestone in Paytm’s monetary companies journey, and we’re very excited to welcome Raheja QBE Common Insurance coverage into the Paytm household. Raheja QBE Common Insurance coverage is powerful within the legal responsibility enterprise and have just lately launched new merchandise within the motor phase as effectively. After we get the approvals, we’ll strengthen the providing by bringing new revolutionary merchandise based mostly on buyer wants,” mentioned Amit Nayyar, President, Paytm.
Nayyar mentioned the acquisition would make Raheja QBE the platform for Paytm to create numerous basic insurance coverage merchandise, whereas leveraging Paytm Insurance coverage Broking Ltd, arrange in late 2019, to distribute merchandise of different insurance coverage corporations on its platform.
“This acquisition will deliver the potential of producing insurance coverage merchandise which will be distributed by way of a number of channels together with Paytm insurance coverage broking. The overall insurance coverage may even distribute its merchandise by way of different channels like aggregators, brokers and brokers as effectively,” mentioned Nayyar.
Prism Johson mentioned in a regulatory submitting that it expects the deal to be accomplished by March-end 2021 although it could be topic to approvals from the Insurance coverage Regulatory and Growth Authority of India (Irdai).
The acquisition will probably be made by QorQl Pvt. Ltd, a expertise agency owned 51% by Sharma and the remaining by Paytm (49%).
“Paytm might need chosen QorQl, an entity during which Vijay Shekhar Sharma is a main shareholder to make this acquisition, because it needs to flee the narrative of a ‘Chinese language firm now investing in India’s insurance coverage panorama, which can have brought on challenges round approvals from the regulator,” mentioned an analyst at a administration consulting agency, requesting anonymity. Paytm’s Sharma earlier advised Mint that the digital funds agency was bullish on a monetary companies execution technique together with insurance coverage, wealth (by way of Paytm Cash) and even banking, to outpace the influence on segments like journey and leisure, from a income perspective.
In February 2018, Paytm established two new entities—Paytm Life Insurance coverage Company Ltd and Paytm Common Insurance coverage Company Ltd to function within the insurance coverage house. Paytm says that at present it has no plans to use for a life insurance coverage licence.
“We proceed to search for alternatives within the life insurance coverage enterprise and haven’t any fast plan to use for license,” Nayyar mentioned.
“…Our choice to promote our stake in Raheja QBE is according to our mission to create sustainable shareholder worth and can allow us to focus our assets on our core companies,” mentioned Vijay Aggarwal, managing director, Prism Johnson. It will likely be fascinating to look at how Paytm continues to help its losses whereas scaling up the overall insurance coverage enterprise, mentioned Bhavik Hathi, managing director, Alvarez & Marsal (India), a administration consultancy.