Edelweiss Financial Services to sell its 70% stake in insurance broking JV

Edelweiss Financial Services will be entitled to receive a deferred contingent consideration based on the future revenue of Edelweiss Gallagher Insurance Broker, in the manner set out in the agreement.

Edelweiss Financial Services on Friday said it will exit the insurance broking business by selling its 70 per cent stake in Edelweiss Gallagher Insurance Brokers Ltd for Rs 307.60 crore.

"The company has entered into an agreement... to divest its entire shareholding (currently 70 per cent) in Edelweiss Gallagher Insurance Brokers Ltd, a subsidiary, engaged in the business of insurance broking to Arthur J Gallagher & Co...," Edelweiss Financial Services said in a regulatory filing.

Gallagher, who previously held 30 per cent in the business, will now be acquiring all the remaining shares, taking its stake to 100 per cent, the filing added.

The company said, as per the agreement 37,00,000 equity shares of Rs 10 each representing 70 per cent of the paid up share capital of Edelweiss Gallagher Insurance Brokers held by the company to be sold for a consideration of Rs 307.60 crore, in one or more tranches, in the manner as set out in the agreement.

In addition to the sale consideration, Edelweiss Financial Services will also be entitled to receive a deferred contingent consideration based on the future revenue of Edelweiss Gallagher Insurance Broker, in the manner set out in the agreement.

Rashesh Shah, Chairman, Edelweiss Group said the sale will provide the company "with the flexibility to reallocate capital and invest in scaling up our fast-growing life and non-life insurance businesses, making this a win-win for both of us."

Vyvienne Wade, Gallagher Chairperson of Global Broking in Europe, Middle East, and Asia said "we view India as a key and strategic market for the insurance industry and for Gallagher, given its scale and growth potential, and we see many interesting opportunities for further development of the business."

The transaction is subject to receipt of regulatory and other appropriate approvals (including approval of the Insurance Regulatory and Development Authority of India) and fulfilment of the obligations/conditions prescribed in the agreement.

Gallagher and Edelweiss had entered into a partnership in May 2019, with Gallagher acquiring a minority shareholding in the insurance broking business.

Edelweiss Gallagher Insurance Brokers offers general insurance solutions to clients across India.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel