A day after the Rs 5,600 crore initial public offer (IPO) of ICICI Lombard General Insurance sailed through successfully, the Insurance Regulatory and Development Authority of India (IRDAI) has granted the final approval to the new general insurance company Go Digit General Insurance floated by India-born Prem Watsa, who controls Fairfax, the parent firm of Lombard.
The entire ICICI Lombard General Insurance IPO was offer for sale (OFS) by ICICI Bank and Watsa-owned Fairfax, which offloaded their 7 per cent and 12 per cent stake respectively.
Post IPO, Fairfax stake (through Lombard) will fall to 9.90 per cent. IRDAI wanted Fairfax to bring down the stakes in ICICI Lombard below 10 per cent to facilitate approval of licence to the new company.
Watsa who was holding 36 per cent in the joint venture — ICICI Lombard — had reduced it down to below 10 per cent in two phases in the last couple of months. Fairfax will hold 49 per cent in the new insurance company approved by the IRDAI on Wednesday.
According to insurance sources, there are questions which arise after the approval. “Will they drop Lombard’s name from the company’s brand? While 9.90 per cent stake is considered as financial investment, technically Fairfax group will have significant stake in two insurance companies in India,” said an insurance sector official.
The new company had already created a buzz in the market as Kamesh Goyal, a former senior functionary of Allianz who was earlier heading life and non-life operations of Allianz in India, is also a major partner in Fairfax’s new insurance company. Some of the Goyal’s earlier colleagues are also partners in the company. The company will be headquartered in Bengaluru and is expected to use a digital platform to do general insurance business.
Earlier this year, Fairfax’s proposed deal to acquire a 51 per cent stake in Kerala-based Catholic Syrian Bank fell through over differences in valuation. Fairfax was founded in 1985 by the present chairman and chief executive officer V Prem Watsa. The company has been under present management since 1985 and is headquartered in Toronto, Canada. Its common shares are listed on the Toronto Stock Exchange under the symbol FFH and in US dollars under the symbol FFH.U.
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