Mumbai, NFAPost: Financial technology platform Paytm, owned by One 97 Communications, and its CEO Vijay Shekhar Sharma are set to acquire Raheja QBE General Insurance announcing the company’s plan to enter the general insurance space.
Mumbai-headquartered general insurer Rehaja QB began its operations in 2009. It is a joint venture with 51% stake with Prism Johnson and 49% with QBE Australia. Sourced revealed that for acquiring the 51% stake Paytm paid 289.68 crore.
“Paytm is set to acquire both stakes and would own 100 per cent of the company,” Paytm said in a statement on Monday, adding that the strategic acquisition is through QorQl Pvt Ltd, a technology company in which Vijay Shekhar Sharma is a mjority shareholder, the remaining stake held by Paytm.
It did not disclose the transaction amount. The deal will be subject to regulatory approvals. In a regulatory filing, Prism Johnson said it will be selling its stake for ₹289.68 crore and the sale is expected to be completed by March 31, 2021.
“The board of directors of the company, at its meeting held today, has approved divestment of its entire holding of 51% of the paid-up equity share capital in Raheja QBE General Insurance Company Limited (‘RQBE’), a material subsidiary, to QORQL Private Limited, a technology company with majority shareholding of Vijay Shekhar Sharma and remaining held by Paytm (owned by One97 Communications Limited), for an aggregate consideration of Rs 289.68 crore,” it said.
The acquisition would enable Paytm, which already has a host of financial services, including a payments bank, to work in the general insurance sector and will “democratise general insurance for driving financial inclusion”.
“Paytm has a large consumer base for its digital payments and financial services offerings. It has also built an extensive merchant ecosystem empowering them with end-to-end business solutions. The insurance company would leverage this network to build innovative insurance products to accelerate its reach and adoption,” the company noted.
Paytm President Amit Nayyar said the acquisition as an important milestone in the company’s financial services journey.
“We are very excited to welcome Raheja QBE General Insurance into the Paytm family. Its strong management team will help us accelerate our journey of taking insurance to the large population of India with the aim to create a tech-driven, multi-channel general insurance company with innovative and affordable insurance products,” said Paytm President Amit Nayyar.
All employees of Raheja QBE would continue working at Mumbai and other locations.
Commenting on the development, Prism Johnson Managing Director Vijay Aggarwal said the company’s decision to sell our stake in Raheja QBE is in line with its mission to create sustainable shareholder value and will enable to focus resources on core businesses.
“This move will help the insurance business scale up to new heights by leveraging the large customer base and innovative products offered by Paytm,” said Prism Johnson Managing Director Vijay Aggarwal.
The divestment will result in the termination of the company’s joint-venture with Australia’s QBE in the general insurance business in India, Prism Johnson said, adding that post the divestment, RQBE will also cease to be a subsidiary of the company.