Prudential to buy majority stake in Bharti Life for 35 billion rupees

[NEW DELHI] Prudential agreed to acquire a 75 per cent stake in Bharti Life Insurance Company for an initial cash consideration of 35 billion rupees (S$467.6 million), a deal that would allow the UK-based insurer to tap into India’s vast uninsured middle class looking for financial security and wealth creation.

An additional consideration of up to seven billion rupees may be payable upon completion of the deal, the companies said in statements on Sunday (May 17).

Prudential will buy the shares from Bharti Enterprises-controlled Bharti Life Ventures and Mumbai-listed 360 ONE Asset Management. While 360 ONE will completely exit its 15 per cent holding, billionaire Sunil Bharti Mittal’s Bharti Enterprises will reduce its stake to 25 per cent from 85 per cent, according to people familiar with the matter.

India’s move to allow full foreign ownership in its insurance industry cleared the way for Prudential to deepen its footprint in the country, something it has long sought to do. The deal however will still face regulatory scrutiny for transparency, shareholder protection and market competition purposes.

The company said that “regulatory approvals for the transaction are expected to require Prudential to reduce its shareholding in ICICI Prudential Life Insurance to under 10 per cent.”

Prudential currently holds a 22 per cent minority stake in the listed ICICI Prudential Life, alongside a 35 per cent stake in ICICI Prudential Asset Management. The insurer said it is engaging with relevant regulatory authorities to secure an “appropriate time frame” for the divestment to protect shareholder value.

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“This partnership opens new opportunities for Bharti Life’s employees,” said Sunil Bharti Mittal, founder and chairman of Bharti Enterprises, “and further reinforces the strategic relationship between India and the United Kingdom.”

Prudential said the deal does not alter the company’s commitment to return US$7 billion to shareholders between 2024 and 2027. BLOOMBERG