As per the reports, Jio Financial Services is in discussion with Allianz SE to form a partnership, after the German company exited its 24-year-old joint venture with Bajaj Group. It will be the second attempt of Allianz to enter the Indian insurance market and it plans to acquire at least 50% stake in the new entity.
Allianz had been in discussion with Jio Financial Services for several months and the conversation became more frequent after Allianz exited Bajaj. The source of the problem was claimed to be the fact that Bajaj did not want to assign its shares, which created strategic issues. Allianz is also thought to want more control over the management and operations of any new venture.
Jio-Allianz partnership would need regulatory approval from Competition Commission of India (CCI) and Insurance Regulatory and Development Authority of India (IRDAI). First of all, Allianz must be delisted as the promoter of its former joint ventures before proceeding further.
The collaboration of Allianz with Jio can be seen as a significant move as India is one of the growing markets for Allianz which has already invested approximately $1.5 billion in the country through equity and debt funds. On the other hand, Jio Financial Services has been growing its insurance broking business and has launched 54 direct-to-consumer plans since January for auto, health and life insurance. Mukesh Ambani has already indicated that he is looking for collaboration with global companies which may have created a notion of Allianz’s relationship. If successful, this partnership could greatly strengthen Jio Financial Services’ standing in the insurance sector.
