After nearly five years of its association,Bharti group on Friday exited from its financial services joint ventures with French firm AXA and sold its entire 74 per cent stake in both general and life insurance businesses to Mukesh Ambani-led RIL for an undisclosed amount. "The decision is in line with Bharti's strategy of focusing its energies and financial resources in businesses where it is making a deeper impact both in India and overseas. Currently,the financial services ventures do not fit into Bharti's long-term growth plans," the company said in a statement. The company had entered into these joint ventures with the AXA group in 2006 and held 74 per cent stake in both these ventures Bharti AXA Life Insurance and Bharti AXA General Insurance. "It (Bharti) intends to use the proceeds from selling its interests in these joint ventures towards other group businesses in India and abroad," it said. Bharti,a leading telecom player,has operations in 19 countries including 16 nations in Africa where it acquired Zain Telecom's assets last year for over USD 10.7 billion. It has accumulated mobile subscriber base of over 190 million. In a separate statement RIL also said that the company has reached an understanding with Bharti on acquiring its entire stake in JV with AXA. "This sale is subject to necessary approvals from IRDA (insurance regulator),Competition Commission of India ( anti-monopoly watchdog) and any other relevant/applicable authorities," Bharti said. Bharti also said that it was in the process of offloading its stake in its JV with AXA for asset management. According to Reliance statement,RIL and its subsidiary Reliance Industrial Infrastructure (RIIL) would effectively own respectively 57 per cent and 17 per cent in both the insurance companies and would become AXA's JV partners in India. AXA would retain its current 26 per cent shareholding and would continue to manage the day to day operations of both JVs. As per the existing regulations,the foreign partner in the insurance sector is allowed to have a maximum stake up to 26 per cent in the joint venture. Reliance said the proposed agreement contemplates an option by which AXA would acquire from RIL and RIIL up to 24 per cent shareholding in both the insurance companies in accordance with the applicable regulations as and when the FDI regulations permit such a holding by AXA. "Upon exercise of such an option,RIL will effectively own 45 per cent,RIIL will effectively own 5 per cent and AXA the balance 50 per cent in both the insurance companies," the Reliance statement said. None of the three parties; Bharti,RIL or AXA were willing to speak about the valuation of the 74 per cent stake held by Bharti. Sources in the industry have pegged the valuation between Rs 3,000 crore to Rs 5,000 crore. This,however,could not be confirmed. The AXA group is a worldwide leader in insurance and asset management,with 214,000 employees serving 95 million clients. In 2010,its (IFRS) revenues amounted to 91 billion Euros. In 2010-11,Bharti-AXA Life had collected premiums 132 million euros and Bharti-AXA General Insurance collected gross direct premium of about 92 million euros.
