IFFCO divests 23% stake to JV partner Tokio Marine Holdings
7th July 2017; New Delhi: World’s largest processed fertilizers cooperative, IFFCO divested it’s 23% stake in its insurance arm IFFCO-Tokio General Insurance to Japan-based Joint Venture partner Tokio Marine Holdings Inc.
IFFCO made this decision after the Indian govt. hiked the FDI limit in the insurance sector to 49% in March 2015. Tokio Marine Holdings Inc has been granted approval by IRDAI to raise its shareholding in IFFCO-TOKIO from 26.0% to 49.0% by way of acquisition of additional 23.0% shares worth approximately INR 2530 crores through its wholly-owned subsidiary, TM Asia Pte. Ltd. The transaction is expected to be completed by July 2017.
IFFCO entered into the insurance sector after the opening up of insurance business for the private sector in the year 2000 for the benefit of its rural customers. The aim was to take insurance to the doorstep of Indian farmers & villages. The company has grown to be the fourth largest private sector non-life insurance company in India, leveraging IFFCO’s strong network and brand recognition across India.
With continuous high economic growth and an increase of the middle-income class, the Indian insurance market is expected to grow rapidly. By further utilizing Tokio Marine Group’s broad expertise and know-how on insurance business accumulated in diverse geographies, IFFCO-TOKIO aims to provide high-quality products and services that meet customer needs and contribute to the further enhancement of size and profitability of the company and non-life insurance sector in India.
Dr.U.S. Awashti, Managing Director, IFFCO said that this stake sale would help IFFCO in raising the required capital to focus on more agribusinesses to better serve the interests of the Indian farmers in the fast-changing agriculture sector in India.
The additional share purchase is in line with Tokio Marine Group’s international business strategy, to achieve sustainable growth and profit expansion as well as enhance diversified business portfolio through capturing growth opportunities in emerging countries.