Reliance Capital in talks to sell a stake in insurance distribution biz to UK co

12 Jan 2009

Reliance ADAG is in talks to sell a minority stake in its insurance distribution business to the UK-based insurance broking firm THB. According to sources, Reliance ADAG is talking to four international firms including Lockton, Howden and Tyser to sell a stake in Standard Composite Insurance Brokers (SCIB), ADAG’s insurance distribution company, but THB is the lead contender for the stake purchase. However, Reliance Money CEO Sudip Bandyopadhyay, declined to comment on the developments but said that its insurance broking business has been growing very fast and they are looking at all options to scale it up further. Reliance Money is looking to build a strong presence in the distribution of reinsurance products and in risk assessment vertical, where it is a small player. It plans to bring in strategic expertise from foreign partners who are specialists in the reinsurance business.

THB is an independent UK-based insurance broker, established in 1968. It provides insurance broking, risk management and underwriting services to wholesale and retail clients. The firm, which floated the Alternative Investment Market of London Stock Exchange in 2002, acquired Lloyd’s broking interests last year.

SCIB is a subsidiary of Reliance Money, the stock brokerage and financial products distribution company of Reliance Capital. Reliance Capital is the public listed financial services firm promoted by Reliance ADAG. The company undertook business worth Rs 130 crore in the first nine months of 2008-09, which is 200% more than the same period last year. It is likely to touch Rs 300 crore by March ’09 as the last quarter is usually the peak period for selling insurance products.

Valuations should be nearing two times the revenues. Given that Reliance Money is targeting Rs 300 crore for FY09, SCIB should be valued around Rs 600 crore. SCIB works with multiple insurance companies including Tata AIG, Reliance Life Insurance, Kotak Mahindra Old Mutual, Birla Sun Life in the life insurance space and Royal Sundaram, IFFCO-TOKIO in the general insurance business. It sells insurance products through more than 10,000 outlets in India.

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