New Delhi: 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.