Edelweiss Financial Services on Monday said its insurance brokerage arm EGIBL has ceased to be its subsidiary post transfer of majority stake to Arthur J Gallagher & Co. In July this year, Edelweiss had informed about the acquisition of the stake in its subsidiary Edelweiss Gallagher Insurance Brokers Ltd (EGIBL) by Arthur J Gallagher & Co (AJG).
"On receipt of the necessary approvals, the company has in the first tranche, transferred 61 percent of the stake held by the company in EGIBL to AJG on October 18, 2021. "Consequently, AJG now owns 91 percent of EGIBL, as a result of which EGIBL has ceased to be the subsidiary of the company," Edelweiss said in a regulatory filing.
The divestment of stake in EGIBL has come post approval from the Insurance Regulatory and Development Authority of India (Irdai). The business will transition to the Gallagher brand in the coming months.
Edelweiss Group will focus on growing its life and non-life insurance businesses, which have been among the fastest-growing in the industry, the company said in a release.
"At Edelweiss, we have always been driven by long-term value creation, seeding, nurturing businesses, forging partnerships at the opportune time to build scale. We have enjoyed an excellent relationship with the Gallagher team, and we believe that they will add a lot more value to the business and give it a global edge," Rashesh Shah, Chairman, Edelweiss Group, said.
This move also brings to the Edelweiss group the flexibility to reallocate capital, which post this transaction and the strategic partnership in the wealth business is ample, Shah added.
"We now have adequate capital and a stronger balance sheet and look forward to scaling up our fast-growing life and non-life insurance businesses, as India turns a corner post the pandemic," he said.
Shares of Edelweiss Financial Services closed at Rs 81 apiece on BSE, up 1.69 percent from the previous close.