Bajaj: No cheer from Allianz deal

The Bajaj Group and Allianz SE are parting ways after 24 years. Bajaj will buy Allianz's 26% stake in its insurance business: Bajaj Allianz General Insurance Co. Ltd and Bajaj Allianz Life Insurance Co. Ltd.

- Manish Joshi

Based on the price to be paid of ₹13,780 crore for the general insurance stake and ₹10,400 crore for the life insurance stake, the valuation of the two businesses works out to ₹53,000 crore and ₹40,000 crore.

The structure of the deal involves Bajaj Finserv and Bajaj Holdings buying out about 1% and 20%, respectively, with the rest to be bought by Jamnalal Sons. The Street's reaction to the deal is muted, with shares of Bajaj Finserv and Bajaj Holdings remaining almost flat to negative.

After the transaction, Bajaj will get full ownership of the general and life insurance businesses. However, this may not be for long as the management has discussed the possibility of listing both businesses in future.

But does it need capital to grow?

On the contrary, as against the regulatory requirement of solvency ratio (similar to capital adequacy ratio) at 150%, the measure for Bajaj Allianz General and Bajaj Allianz Life is significantly higher at 300% and 369%.