Bharti group of Life insurance

Five years ago, the Bharti group on Friday exited from its financial services joint ventures with French firm AXA and sold its entire 74 per cent stake in general and life insurance businesses to Mukesh Ambani-led RIL for an undisclosed amount.

“The decision is in line with the Bharti's strategy of focussing its energies and financial resources in businesses where it is making a deeper impact in India and overseas. At present, the financial services ventures do not fit into Bharti's long-term growth plans,” the company said in a statement.

The company had entered into these joint ventures with the AXA group in 2006 and held 74 per cent stake in these ventures — Bharti AXA Life Insurance and Bharti AXA General Insurance. “It (Bharti) intends to use the proceeds from selling its interests in these joint ventures towards other group businesses in India and abroad,” it said.

In a separate statement RIL also said the company had reached an understanding with Bharti on acquiring its entire stake in the joint venture with AXA.

“This sale is subject to necessary approvals from the Insurance Regulatory and Development Authority, the Competition Commission of India and any other relevant/applicable authorities,” Bharti said.

Bharti also said that it was in the process of offloading its stake in its joint venture with AXA for asset management.

According to the Reliance statement, RIL and its subsidiary Reliance Industrial Infrastructure (RIIL) would effectively own 57 per cent and 17 per cent, respectively, in both the insurance companies and would become AXA's joint venture partners in India.

AXA would retain its current 26 per cent shareholding and would continue to manage the day-to-day operations of both joint ventures. According to the existing regulations, the foreign partner in the insurance sector is allowed to have a maximum stake up to 26 per cent in the joint venture.

Reliance said the proposed agreement contemplates an option by which AXA would acquire from RIL and RIIL up to 24 per cent shareholding in both the insurance companies in accordance with the applicable regulations as and when the FDI regulations permit such a holding by AXA.

“Upon exercise of such an option, RIL will effectively own 45 per cent, RIIL will effectively own 5 per cent and AXA the balance 50 per cent in both the insurance companies,” the Reliance statement said. None of the three parties —Bharti, RIL and AXA — was to speak about the valuation of the 74 per cent stake held by Bharti.