UK-based health group Bupa plans to raise its stake in its joint venture with Indian insurer Max India to 49 per cent, becoming the first foreign business to outline plans to take advantage of a recent liberalisation of the country's insurance market.
In late December Indian prime minister Narendra Modi passed a temporary decree raising the limit foreign insurers can own in Indian joint ventures from 26 per cent to 49 per cent, following months of inconclusive legislative wrangling.
The decree provides a six-month window in which foreign insurers can apply to raise their stakes, during which time the government plans formally to pass long-awaited legislation opening up the sector.
Bupa said yesterday that it would take advantage of the measure to raise its stake in Max Bupa, India’s seventh-largest medical insurance provider by revenue.Other global insurance groups are expected to follow Bupa’s lead, including Japan’s Nippon Life, which has a 26 per cent stake in the insurance arm of billionaire Anil Ambani’s Reliance conglomerate.
Gerry Grimstone, chairman of Standard Life, has predicted that liberalising Indian insurance rules will prompt a wave of flotations, including the listing of the UK-based group's insurance joint venture with HDFC, a financial services group.
Bupa declined to provide details of the likely size of its investment, or whether the stake increase would be achieved by purchasing Max India’s existing stake, or by Max Bupa issuing fresh equity.
Analysts had cast doubt on whether insurers would take advantage of the temporary decree, citing concerns that the measure could be reversed if Mr Modi fails to pass legislation in the next session of parliament.
A spokesman for Max Bupa said the company understood that any application approved under the decree would be honoured, even if the temporary measure was rescinded. – Copyright The Financial Times Limited 2015
