Toronto-based financial services company Fairfax Financial Holdings has agreed to acquire an additional 9.0% of the issued and outstanding shares of ICICI Lombard General Insurance Company, the largest private sector general insurance company in India.
The transaction, which was agreed with its joint venture partner, ICICI Bank, values the company at Rs172.25bn ($2.6bn).
Subject to governmental and regulatory approvals, the deal is expected to close in the first quarter of 2016.
ICICI Bank MD and CEO Chanda Kochhar was quoted by Times of India as saying: "We are expecting that the transaction will get completed in the fourth quarter because now we will start the process of obtaining approval from the Insurance Regulatory and Development Authority of India (IRDAI) and Foreign Investment Promotion Board.
"Our JV was for 74-26% only. The fact that they are increasing their stake by 9% shows that they are seeing potential in the market."
Following the completion of transaction, ICICI Bank and Fairfax will own approximately 64% and 35%, respectively, in ICICI Lombard.
According to the Insurance Laws (Amendment) Act in the country, foreign partners can hold up to 49% stake in an insurance venture.
ICICI Lombard reported gross written premiums of approximately $1bn for the year ended 31 March 2015.
Fairfax Financial Holdings has completed the acquisition of Lloyd’s of London specialty insurer and reinsurer, Brit, for around $1.88bn.
Through its subsidiaries, Fairfax offers property and casualty insurance and reinsurance and investment management services.
Image: Fairfax Financial Holdings to buy 9% stake in outstanding shares of ICICI Lombard. Photo: courtesy of Chaiwat/ freedigitallphotos.net.