Bajaj Finserv was asked by the Bombay Stock Exchange (BSE) on Monday to clarify on a news report that the company is planning to buy out the 26 percent stake held by its German partner in its two insurance ventures. The stock spurted more than 8 percent on the BSE during the day and was trading at Rs. 2,212, a gain of 6.58 percent at around 11.20 a.m.
"The Exchange has sought clarification from Bajaj Finserv Ltd with reference to the news appeared in newspaper Mint 'Bajaj Finserv is likely to buy out Allianz's stakes in Bajaj Allianz Life'. The reply is awaited," the exchange said.
Financial services company Bajaj Finserv holds 74 percent in the two insurance companies namely Bajaj Allianz Life Insurance company Ltd and Bajaj General Insurance Company Ltd.
The cost of acquisition is expected to be about Rs. 10,000 crore, the Mint reported, citing three sources who are aware of the development.
"Bajaj is willing to buy Allianz's 26% stake each in the two firms. As per the fair-valuation method, Bajaj will have to invest around Rs.10,000 crore to buy Allianz's stakes in the two insurance companies," the daily quoted one of the sources as saying.
A senior Bajaj Finserve confirmed that the company has initiated talks with Allianz.
"The discussions between Bajaj and Allianz are on. No final decision has been taken yet on whether Bajaj will buy Allianz's stake or a third party will come and acquire Allianz's holding in the two insurance JVs," Sanjiv Bajaj, managing director at Bajaj Finserv, told the Mint.
The Narendra Modi government raised the foreign direct investment (FDI) limit in the insurance sector from 26 percent to 49 percent in March this year. Since then, foreign partners of many joint venture companies have been increasing their stakes in the companies formed with equity participation by Indian companies.
There are 24 life insurance and 28 general insurance companies in India.
The biggest player in the life insurance is state-run Life Insurance Corporation of India with an almost 70 percent share.