New Delhi: In the latest acquisition, digital payments and financial services firm Paytm on Wednesday announced that Switzerland-based reinsurance major Swiss Re will buy a 23 per cent stake in Paytm Insurtech for around Rs 920 crore.
How will the investment help Paytm InsureTech?
With the investment, Paytm Insurtech (PIT), the insurance arm of Paytm, is looking to leverage Paytm’s customer base and merchant ecosystem to develop innovative insurance products.
The stake purchase will help Swiss Re and Paytm work towards bridging the insurance protection gap in the market. “Swiss Re will invest approximately Rs 9,200 million (by way of equity shares and compulsorily convertible preference shares) for an aggregate stake of 23 per cent (Rs 3,973 million upfront, and the balance in tranches, subject to the fulfillment of certain milestones). on a fully diluted basis,” Paytm said in a statement.
According to data from RedSeer, gross written premiums for non-life insurance are expected to increase from $27 billion in fiscal year 2011 to $50-60 billion.
As per the arrangement in the deal, an advance payment of Rs 397 crore will be made, as per the Mint report, and the rest in installments.
The insurance market in India offers a significant opportunity due to the security gap and low penetration of the market as compared to the global average.
The development follows the acquisition of Raheja QBE by Paytm Insurtech. Vijay Shekhar Sharma, Chairman, MD and CEO, Paytm said, “We are excited to partner with Swiss Re for our insurance space as a key strategic investor. Our vision is to take general insurance products to the masses. This is an important milestone in the financial services journey.” .
“We look forward to leveraging Swiss Re’s global insurance capabilities and creating innovative products to enter the Indian market.” Sharma will also invest in Swiss Re as well as PIT in his personal capacity. However, the company did not disclose the investment details that Sharma would make in the PIT.
The investment by Swiss Re and the acquisition of Raheja QBE by Paytm Insurtech is subject to regulatory approvals.
(with inputs from PTI)