The Union budget for FY26 proposed to allow foreign entities to hold 100% stake in local insurance companies, a move aimed to attract foreign capital. Sanlam’s partnership with the Shriram group has lasted over 20 years, across businesses such as insurance, asset management and now, wealth management.
“We have to be very careful. We want our partners to have enough skin in the game. There’s got to be enough in it for everybody,” Group CEO Paul Hanratty said in an interview.
In April 2024, Sanlam had proposed raising its stake in Shriram General Insurance to 51% from 40%, and in Shriram Life Insurance to 54% from 42%. Hanratty said the group is yet to receive regulatory approval for this, and therefore, any talks on raising its stake even further is a “moot point”.
Also read | South Africa’s Sanlam hikes stake beyond 50% in Shriram’s insurance JVs
“It is like asking if I like to go to the moon, but I don’t have a spaceship to get there,” said Hanratty.
Insurance FDI hike
The Union budget proposed to raise the foreign investment limit in insurance companies from 74% to 100%. Greater foreign interest is expected to help the sector, given that India’s insurance penetration — the percentage of insurance premiums to gross domestic product (GDP) — at 3.7% lags the global average of 7%.
Meanwhile, Ajay Piramal-led Piramal Enterprises Ltd is planning to sell its holdings in Shriram Group’s insurance ventures for ₹4,000-5,000 crore, Mint reported on 3 March, citing two people aware of the matter. It holds about 15% in Shriram General Insurance Co. Ltd and about 13.3% in Shriram Life Insurance Co. Ltd and has appointed Avendus Capital and Arpwood Capital as investment bankers to find buyers for its life and general insurance stakes respectively.
Asked if Sanlam would like to pick up Piramal’s stakes, Hanratty said it would not say no to it, but doesn’t really “shift the dial” for them. “We (would) consider it, but we would consider it alongside every other opportunity that’s out there.”
Also read | Why Piramal wants to exit its decade-plus insurance ventures with Shriram
The India business currently accounts for around 20% of Sanlam’s global business. “If you go far enough forward, it’s entirely possible that it could be more than 50% of our our Group. We’re very bullish on India,” Hanratty said, adding that if India grows as expected, it could “easily be the majority of the group”.
‘No third partner’
Hanratty also ruled out getting a third partner in the India insurance business. In Africa, Sanlam has a joint venture with German insurance and asset management company Allianz. Interestingly, Allianz is in discussions to exit its long-standing joint ventures (JVs) with Bajaj Finserv after tussling with the Indian partner to increase its stake in these ventures.
“There’s zero scope for Allianz to come into our Indian business. We don’t like mistresses, only like a wife,” Hanratty quipped.
In fact, Sanlam believes that it is imperative to have a local partner that understands domestic nuances and customers. He does not believe that being completely local maximizes things for companies, but one needs partnerships where the global partner can bring in knowledge and the domestic partner brings local expertise. “We do not subscribe to the idea of one global balance sheet, one centre driving things in most areas of financial services,” he said.
Many of India’s top insurance companies have foreign partners, including ICICI Prudential Life, ICICI Lombard General, Tata AIG, and Future Generali.
Asset, wealth management
Sanlam is now looking to revive its asset management business with Shriram and is also venturing into wealth management.
“The wealth and asset management business is a very natural evolution from insurance in almost every market of the world, as asset management gets built up in insurance companies to manage the assets of the insurer,” Hanratty said, adding that as clients’ wealth rises, demand for wealth management products rises as well.
“There’s this huge space in this middle space, who’s arguably the future rich and future wealth customers. This is a segment today, where we see Shriram is very appropriately positioned. Our customers, over the years, have prospered,” said Subhasri Sriram, MD and CEO of Shriram Capital, adding Shriram’s customers predominantly include businessmen who are not only debt takers but also wealth creators.
“We’ve been in asset and wealth Management for 100 years. We could have started that 20 years ago, but we didn’t. Why? Because we didn’t see a need and an opportunity, that we see today. The customers of Shriram are very different from even 10 years ago,” said David Marshall, executive, group strategy, M&A and Head of Asia Region, Sanlam.
The wealth management business will act as a solution provider and support clients on how to manage their wealth, including providing advisory services such as tax planning, funding, liability structuring, estate planning.
‘Getting it right’
Shriram Asset Management was one of the first asset management companies in the country but its licence was dormant for almost 30 years before being reactivated two years ago. “This time we know what we are getting into and we are getting it right,” Sriram said, adding that this why Sanlam has now come back as a 50% partner in the business.
Also read | How Shriram Finance streamlined its structure and outperformed the market
Sanlam will invest about ₹105 crore in the asset management business, pending approval from the Securities and Exchange Board of India (Sebi), which will translate to 50% promoter holding for the Sanlam Group following equity dilution. The transaction will also trigger an open offer, Sriram said, adding that the public holding in the listed company may get diluted to about 10% from the current 14%.
In addition, Sanlam will infuse another ₹150-250 crore in the wealth management, which is ready to be launched, pending approvals. Sriram said that everything from the products, management team and technology platform are in-place, and product tie-ups are “happening as we speak”.
The venture will launch with a full bouquet of products from day one including mutual funds, direct equity (through Shriram’s broking licence), portfolio management services (PMS), fixed deposits, advisory services and other alternative products.
