DLF exits from insurance biz; sells 74% stake in DLF Pramerica
New Delhi: India's largest realty firm DLF will exit from life insurance business by selling 74 percent stake in its joint venture DLF Pramerica Life Insurance to Dewan Housing Finance, reportedly for over Rs 350 crore.
DLF had in 2007 announced entry into the life insurance business through a joint venture with US insurance giant Prudential Financial's arm.
The joint venture, where the Indian realty firm held 74 percent in the joint venture and the rest was owned by Prudential International Insurance 26 percent, had reported a combined loss of over Rs 250 crore during past two fiscals.
"...The company today signed definitive agreements to sell its 74 percent stake in the life insurance joint venture DLF Pramerica Life Insurance...To Dewan Housing Finance and its group entities," DLF said in a filing to BSE.
Neither of the companies, however, disclosed the value of the deal but sources said it could be worth Rs 350-400 crore.
"These agreements are subject to regulatory approvals. The transaction consideration shall be disclosed post receipt of all such approvals," it said.
"This transaction is in line with our ongoing strategy to divest non-core businesses or assets. We have had a very cordial relationship with Prudential and wish them the best in their new partnership with DHFL," DLF Group CFO Ashok Tyagi said in a statement.
During 2012-13, the company had earned first premium income of Rs 138.64 crore, a 35 percent increase over Rs 102.83 crore in the previous fiscal.
At the end of 2012-13, the joint venture completed about four-and-a-half years of operations and had 55 branches in India and a team of 5,487 individual agents.
The company has issued 1,02,418 insurance policies in 2012-13 as against 69,926 in previous year.
The share capital of insurer stood at Rs 320 crore at the end of March 2013.
DLF Pramerica, upon completion of the agreement, will be renamed as DHFL Pramerica Life Insurance Company Ltd.
The business of the current entity will continue without interruption and the current management will run the joint venture, under the stewardship of the shareholders, DHFL said in a separate statement.
Last year, US-based insurer New York Life had exited India by selling its 26 percent stake in its joint venture company to Japan's Mitsui Sumitomo Insurance Company.
Indian insurance sector has 42 private players in life and general insurance business sharing about 30 percent of the market share in life insurance and 41 percent of the market share in general insurance sector.
Commenting on the deal, DHFL Chairman and Managing Director Kapil Wadhawan said this JV will help DHFL extend its philosophy of financial inclusion by broadening the range of products and services available to our customers as well as other customers, across India, especially in Tier 2 and 3 cities and towns.
DHFL believes that this JV will generate long-term value for its shareholders, he said.
This new partnership also reinforces Prudential Financial Inc. (PFI's) commitment to building a strong presence in India, a country whose future growth over the long term will enhance our 138-year history of providing financial security to customers across the world, Tim Feige, Senior Vice President and International Insurance Group Executive at PFI said.
DLF has been selling its non-core assets and business to focus on core business of real estate. It has already exited from wind energy business and has entered into an agreement to sell its luxury hospitality chain, Aman Resorts.
The country's largest realty firm has raised almost Rs 10,000 crore in the last 3 years through divestment of its non-core business.
Shares of DLF closed 0.20 percent up at Rs 175.10 apiece today on the BSE even as Sensex fell by 1.42 percent.