‘Kotak will expand general insurance business with proceeds of Zurich deal’

livemint.com:

insurance company to Zurich Insurance Co. for ₹4,000 crore. In an interview, Jaimin Bhatt, chief financial officer of Kotak Mahindra Bank, comments on the strategy behind the sale and the valuation the business is seeking.

Edited excerpts: We as a group keep looking for how we can add value in a variety of businesses which we are in. This (non-life insurance) is a business which we have brought to a stage where we have created value in the company. But we also believe that to take it to the next level, when there’s a huge opportunity there, it would help to get into an alliance with somebody who’s global.

Based on our distribution network and our brand, and using their global expertise, the expertise on product technology, we plan to create a much larger entity. So, that was the whole process of trying to see how we can maximize value for the overall good. The exact number of how much is primary and how much is secondary will be determined only at closing (of the transaction).

So, we don’t exactly know the numbers right now, but it will be roughly ₹4,000 crore. We will arrive at that figure only at the time of closing of the deal. As of now, the company is being valued at ₹6,000 crore pre-money.

Primary money will obviously be used to scale up the company. As you’re aware, the general insurance company at our end also has been loss-making. General insurance companies generally have negative growth and negative P&L in the initial years.

And we do believe that this growth capital will help the company scale up decently from where it is today. And what we get for us through secondary is honestly small. I sit at the consolidated level with a capital of about ₹1.20 trillion.