Bajaj Finserv shares took a hit on Tuesday, falling over 3% as the company’s joint venture with Allianz, one of the world’s largest insurance companies, came to an end. The French insurer has sold its 26% stake in Bajaj Allianz General Insurance Company Ltd, the Indian joint venture, to existing shareholders for a cash consideration of Rs 24,180 crore.
The news sent Bajaj Finserv’s shares tumbling, with the stock opening at Rs 4,275 and eventually closing at Rs 4,150, a decline of 3.04%. The share sale, which is one of the largest in the insurance sector, values Bajaj Allianz General Insurance at around $3.4 billion.
The exit by Allianz marks an end to a 20-year partnership, which began in 2001. The joint venture was formed to operate a general insurance business in India, offering non-life insurance products such as motor, health, and travel insurance. The partnership had seen significant growth over the years, with the company emerging as one of the top insurers in India.
The sale of Allianz’s stake is expected to help Bajaj Finserv increase its stake in the joint venture to 74%, giving the company greater control over the business. However, the deal also raises concerns about the impact on the partnership’s operations and the insurance sector as a whole.
Industry experts have noted that the exit by Allianz could lead to a change in the company’s strategy, which may not necessarily be aligned with the interests of existing shareholders. Additionally, the deal could also lead to a loss of expertise and resources, which may put pressure on the company’s performance.
In a statement, Bajaj Finserv managing director and chief executive officer, PD Nar teens, said that the company is committed to maintaining its leadership position in the insurance sector and will continue to work with its customers, partners, and employees to deliver excellent products and services.
Despite the challenges that lie ahead, the Bajaj Finserv management has expressed confidence in the company’s ability to navigate the changing landscape and continue to drive growth and profitability. The company has also announced plans to use the proceeds from the deal to reduce debt and increase its investment in new business initiatives.