The deal could acquire about $350 million from the U.S.-based Warburg Pincus, they said.
Warburg Pincus and Premji Invest, the family office of Wipro Ltd founder Azim Premji, bought a 26% stake in SBI General Insurance for $432.38 million in 2019, rating the insurance company at $1.66 billion. They have acquired the shares from Insurance Australia Group Ltd, which established SBI General Insurance in 2010 with the National Bank of India (SBI).
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“Investors have been around for more than six years and now they are looking for an exit,” said one person quoted above. “(SBI General Insurance) plans to conduct an IPO later next year, and Warburg hopes to exit through a share sale before that.”
SBI owns approximately 69% of SBI general insurance, while Premji Invest owns entity Napean Mosporting LLP holds about 15.8% of shares, while Warburg Pincus Vehicles' Honey Wheat Investment Ltd is about 9.9%.
“Warburg Pincus expects its 10% stake to be approximately $350 million, with a valuation of $3.5 billion, more than doubled its investment in the past six years,” the second person added.
Warburg Pincus has been active in India for more than two and a half years and has so far invested about $10 billion in the country. India accounts for more than 10% of global investments in U.S. private equity firms.
Over the past 18 months, Warburg has sold all or part of its shares on the deck of the portfolio company, Kalyan Jewelers and Medplus Health Services.
Warburg Pincus and SBI General Insurance did not respond to an inquiry sent by email on Thursday.
General SBI's powerful running
SBI General Insurance is the 11th largest insurer in India overall, with a market share of 4.3%, based on direct direct premiums written in the first half of 2024-25, the investment information and credit rating agency said in a December report. Among private insurance companies, it ranks seventh in the market share of 4.4%.
According to Crisil, SBI general insurance maintains a relatively diverse mix of traditional sectors such as traditional market segments such as sports and health.
“During the fiscal year 2024, the (SBI General Insurance) auto insurance portfolio has grown healthily at 31%, thus retaining its share of the total premium over the past few quarters.
It added: “In the first half of fiscal 2025, cars accounted for 30% of total premiums, while crops accounted for 24%, followed by health insurance at 19% and fire insurance at 14%.
SBI General Insurance's total direct premium ₹At the end of September 2024, 65.86 million ₹According to the Crisil report, $569.1 billion a year ago. 2024 – After-tax profit increased to ₹4.14 million ₹For the corresponding annual period, it is Rs 60 crore.
Crisil added that as of September 30, 2024, the key indicator reflecting the underwriting profitability of insurers was 110.8%, and the solvency margin was 2.26 times.
All insurers must maintain the ability of an insurer of 1.5 to meet their debt obligations in order to maintain a solvency ratio. The merge ratio is calculated by adding the loss ratio and expense ratio.
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For PE, high growth bait
Despite low market penetration, India's non-living insurance industry will still see premium income increase by 19.5% year-on-year ₹Strong demand for health and exercise policies in 2023-24 was $11.497.2 billion ($13.8 billion).
This high growth and low market penetration make the home insurance sector attractive to long-term investors such as private equity firms.
“On a global scale, private equity investment in the insurance industry has been rising,” said Sudip Mahapatra, partner at law firm S&R Associates. “Funds can see opportunities for value-added through operational enhancements, such as expansion using AI and distribution. For insurers, private capital enables them to expand products and distribution.”
Recent high-profile deals in India's insurance industry include Bajaj Finserv's decision to acquire a 26% stake in German insurance company Allianz SE in its insurance business – Bajaj Allianz General Insurance Co. ₹241.8 million, breaking a 24-year partnership.
In addition, Piramal Enterprises Ltd plans to be planned for Rs 4,000-5,000 crore”>Selling its shares in the insurance business of Shriram Group ₹4,000-5,000 million. Last year, the Central Bank of India purchased a 24.91% stake in the future Generali India Insurance.
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