A senior executive at AXA has said they are awaiting regulatory approval by the end of the year to swap its majority partner in its Indian insurance joint venture. Axa’s Shanghai branch may also be converted into a subsidiary company.
Indian conglomerate Reliance Industries owned by billionaire Mukesh Ambani, said in June it signed a deal to buy Bharti Enterprises’ 74% stake in its life and general insurance ventures with AXA for an undisclosed amount.
“The joint venture is 50%-50% in spirit and if the Indian government removes the restrictions, we would like to take it to 50% (equity stake) or as close to 50% as possible,” John Dacey, AXA’s group vice chairman for Asia Pacific told Dow Jones Newswires in an interview on the sidelines of the Pacific Insurance Conference in Singapore.
The company had said earlier it was premature to comment on acquiring a bigger stake. Current Indian rules limit foreign holdings in insurance companies at 26%.
AXA is also keen to expand its business in China, the world’s fastest growing market for most products, and may convert its general insurance branch office in Shanghai into a subsidiary company, Dacey said.
With a branch, AXA is limited to selling insurance products to local clients only in Shanghai, though it can offer nationwide services to its global clients. Having a subsidiary would allow it to expand its service to local clients across the country.
“We are looking at both product expansion and geographic expansion in China. We are open to partnerships with local companies,” he said.
AXA expects its life insurance business to grow by a strong double-digit percentage in 2011 after it grew close to 40% last year, Dacey said, adding its general insurance business is also expected to grow in “high single digits or even double digits” this year.
The company expects strong growth in Hong Kong, Thailand and Indonesia as economies in Southeast Asia expand at a rapid pace, Dacey said.
In India, the change in partnership must be approved by the Insurance Regulatory and Development Authority and also by the Competition Commission of India.
The Bharti group, which owns India’s biggest telecommunications firm by market share, is exiting the insurance business as it focuses on building its core business in Africa, where it acquired the assets of Kuwait’s Mobile Telecommunications Co. (ZAIN.KW) last year. Bharti and AXA started their insurance venture in 2006.
Meanwhile, Reliance, India’s largest listed company by market value, has been seeking to expand its services beyond its traditional commodity prices driven polyester and oil businesses. The group’s move into the relatively untapped Indian financial sector was facilitated after a 2005 pact between Mukesh Ambani and his estranged younger brother Anil ended last year.
Singapore, September 13, 2011 (Dow Jones)