Bajaj Finserv, Allianz SE's 25-year partnership may end this March
What's the story
Bajaj Finserv, headed by Sanjiv Bajaj, is ending its nearly 25-year-old partnership with Munich-based insurance giant Allianz SE.
The joint venture between the two companies, which operates in life and general insurance, could cease operations as soon as March this year, according to Moneycontrol.
The details of the separation are likely to be finalized by the end of this month.
Strategic differences
Disagreements over future direction trigger separation
Reportedly, the potential split stems from disagreements over the future direction of the partnership.
Allianz SE had shown interest in increasing its stake in the JV, a move resisted by Bajaj Finserv.
The latter currently holds a 74% stake in both insurance entities - Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company.
The remaining 26% is held by Allianz SE.
Stake valuation
Valuation discussions underway for Allianz's stake
Discussions are now on for the final valuation of Allianz's share and how Bajaj Finserv will buy the German insurer's stake from the JV.
"What should be the terminal valuation of Allianz's stake and how Bajaj Finserv should buy out the German insurer's stake from the JV are under consideration," said an insider familiar with these talks.
Market estimates
Analysts estimate potential market value of insurance arms
Equity analysts estimate Bajaj Allianz Life Insurance's embedded value at ₹56,000-59,000 crore (₹300-330 per share).
Meanwhile, Bajaj Allianz General Insurance's potential market value is at around ₹56,000-60,000 crore (₹400-450 per stock).
These numbers are expected to be near the exit multiples due to Allianz. However, as unlisted entities, official valuations for both the insurance arms are not publicly available.
Post-split strategies
Allianz's future plans in India post-separation
Despite the possible split, Allianz SE is still focused on bolstering its presence in India's insurance market.
An official spokesperson for Allianz said, "As a successful foreign investor in Property-Casualty insurance in India, Allianz intends to further strengthen its position."
The company considers India as a key growth market for the next few years.