Zurich Insurance bets on India with $487 mln stake in Kotak arm

• Summary

• Companies

• Zurichs investment tops other global insurers in India

• India general insurance premiums grew 11% in 2021-22

• Kotak shares rise as much as 2%

BENGALURU, Nov 2 (Reuters) - Zurich Insurance Group (ZURN.S) will buy a 51% stake in Kotak Mahindra Banks (KTKM.NS) general insurance arm for about 40.51 billion rupees ($487 million), giving the European insurance giant a foothold in Indias fast-growing insurance market.

The news, which was confirmed by the companies on Thursday and Reuters first reported in June, will be the largest investment by a global insurer in an Indian non-life insurer. It boosted Kotak shares as much as 2% to 1,758.65 rupees.

\“This development is just a matter of getting access to India, one of the key growth markets,\” said Emkay Global analyst Avinash Singh said. \“To start from scratch, it would have taken much longer to build a brand visibility.\”

\“While Kotak General is not among the top players in the sector, the Kotak brand as such will give Zurich a good headstart,\” he added.

Kotak General Insurance competes with larger rivals HDFC ERGO and Bajaj Allianz, which also count foreign insurers as investors.

Asias third-largest economy in 2021 relaxed the cap for overseas investment in the insurance sector, allowing acquisition of majority stakes of up to 74% against 49% permitted earlier.

More than 30 companies operate in Indias general insurance market, where annual premium collections grew 11% to reach $26.7 billion in 2021-22, helped by rising financial literacy and income levels, according to a CareEdge Ratings report.

The deal comes as Kotak Mahindra Bank said last month the central bank approved the appointment of veteran international banker Ashok Vaswani as the banks chief executive officer after founder and billionaire Uday Kotak announced plans to step down.

Zurich Insurances stake purchase will give Kotak General Insurance a post-money valuation of about 79.43 billion rupees ($954.53 million), according to an exchange filing.

Zurich Insurance Co, a unit of one of Europes largest insurers, will buy an additional 19% stake in Kotak General Insurance within three years, the companies said.

The deal is subject to regulatory approval from Indias central bank, insurance regulator and antitrust regulator, the statement said.

($1 = 83.2140 Indian rupees)