Cape Town – Financial services group Sanlam has increased its stake to 49% in Indian insurance company Shriram Life and Shriram General.
In a statement the company explained that due to regulatory changes, allowing a 49% foreign shareholding in insurance companies in India, it was able to increase its direct stake by 23%.
Sanlam currently holds a 26% stake in Shriram Capital Limited (SCL) through Sanlam Emerging Markets (SEM). Shriram is a leading financial services group in India, with stakes in credit and insurance businesses.
“Given the market opportunity and diversification benefit, it was always our intention to increase our stake pending the change in regulations for increased foreign shareholding,” the group stated in an emailed response to Fin24.
“This acquisition is in line with SEM’s commitment to drive growth opportunities in both current and new markets,” stated Junior Ngulube, chief executive officer of SEM.
India presents an "exciting market" for the group, which sees "positive opportunities" for growth over the longer term. Currently the GDP growth rate is at 7.6%, making India one of the fastest growing economies in the world.
The insurance penetration in India at 3.4% is low, relative to the world average of 6.2%. “In India, we would like to have a significant presence which gives us further geographic diversification in an economy that is not correlated to the African economies we are active in.”
The Sanlam and Shriram partnership dates back to 2005. Sanlam plans to continue strengthening its position in emerging markets. “We shall continue to look at markets where we believe there is potential for long term growth."
The group also explained that its presence in South East Asia provides "future optionality and diversification benefits".
"At this time, we have no aspirations to go to into the more developed traditional markets of Europe and North America."
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