Amid the government's move to allow 100% FDI in the insurance sector, Sanoti Properties LLP, an entity jointly held by Adar Poonawalla and Rising Sun Holdings Pvt Ltd, has announced the sale of its insurance subsidiary Magma General Insurance Limited (formerly Magma HDI General Insurance Company Ltd), along with Celica Developers and Jaguar Advisory Services, to Patanjali and DS Group for Rs 4,500 crore. The deal marks the two FMCG majors' foray into the growing general insurance sector.

Subject to regulatory approvals, the transaction, formalised through a share purchase agreement (SPA), marks a strategic shift in ownership. With this major acquisition, Patanjali and FMCG giant DS Group aim to tap the growing insurance market through Patanjali’s extensive network of 2,000 counters and 250 mega stores, along with DS Group’s 7 lakh retail touchpoints and 3,000 dealers.

Patanjali Ayurved Limited (PAL), established in 2006, is a major player in herbal, nature-based products, medicines and other FMCG products markets in India, while the Dharampal Satyapal Group (DS Group), established in 1929, is also a prominent Indian conglomerate with a diversified presence across multiple sectors, including food and beverages, confectionery, mouth fresheners, hospitality, dairy, luxury retail, and agriculture.

Magma General Insurance (erstwhile Magma HDI General Insurance Company Limited), with over 70 products across various categories, offers insurance to secure all major risks in the general insurance sphere -- from retail products like motor (car, two-wheeler, commercial vehicles, tractors), health, personal accident, and home to commercial products like fire, engineering, liability, and marine.

Magma recorded a Gross Written Premium (GWP) of Rs 3,295 crore in FY24 and expects to deliver Rs 3,650-3,700 crore of GWP in FY25, with a PBT of Rs 20-25 crore, the statement adds.

Speaking on the expansion, a Patanjali Ayurved spokesperson says: “The sector is undergoing exciting regulatory reforms with 100% FDI opening up. Structurally, general insurance in India is significantly underpenetrated vis a vis developed countries, and IRDAI's vision for insurance for all by 2047 could go a long way in plugging the gap."

"Magma General Insurance could benefit immensely from our ability to infuse growth capital, huge distribution strength including access to rural markets as Patanjali Ayurved products are available at 2,00,000 counters, national level chains including Reliance Retail, Hyper City, Star Bazaar and 250 Patanjali Mega Stores," adds the spokesperson.

On the acquisition deal, Poonawalla said over the last few years, Magma General Insurance built up its business carefully, both on the retail and corporate side, with over 18,000 agents, more than 2,000 corporates, 14 OEMs, including all the large OEMs, and more than 80 players in the financial services business. "It has delivered a growth rate of 26% over the last 5 years. We are confident that it will continue to make a strong contribution to the general insurance industry, under the new ownership of Patanjali Ayurved and the DS Group.”

During this year's Union budget, Nirmala Sitharaman had announced that the FDI limit for the insurance sector would be raised for the companies investing the "entire premium" in the current guardrails and conditionalities associated with foreign investment in the insurance sector. The changes could help both Patanjali and DS Group expand their insurance footprint in India's growing market.

Meanwhile, Ambit Pvt. Ltd. acted as exclusive financial advisor & Khaitan & Co and Wadia Gandhy & Co acted as legal advisors to selling shareholders.