ICICI Lombard Acquires Stake in Bajaj Finance

ICICI Lombard General Insurance Company Limited announced a strategic investment in Bajaj Finance Limited on July 24, 2024, by acquiring a 0.04% stake for a cash consideration of ₹1.60 billion. This acquisition was finalised on the same day.

Strategic Alignment

While the specific rationale behind this investment has not been explicitly outlined, it is likely that ICICI Lombard views this move as an opportunity to strengthen its position in the broader financial services landscape. Bajaj Finance’s strong presence in the consumer lending and financial services sector could potentially offer synergies or strategic benefits for ICICI Lombard.

Investment Details

The acquisition was executed as an arm’s length transaction, with no related party implications. It is important to note that ICICI Lombard’s promoter and promoter group entities may maintain existing investment and business relationships with Bajaj Finance, which are conducted independently.

Financial Highlights

During Q1 FY2025, Gross Direct Premium Income (GDPI) stood at ₹ 76.88 billion as compared to ₹ 63.87 billion in Q1 FY2024, reflecting a growth of 20.4%, which was higher than the industry growth of 13.3%. Excluding crop and mass health, the GDPI growth of the company was at 19.7%, which was higher than the industry growth of 14.8% in Q1 FY2025.

The combined ratio stood at 102.3% for Q1 FY2025 compared to 103.8% for Q1 FY2024. Profit before tax (PBT) grew by 48.8% to ₹7.74 billion in Q1 FY2025 as against ₹5.20 billion in Q1 FY2024. Capital gains were at ₹2.84 billion in Q1 FY2025 as against ₹1.23 billion in Q1 FY2024.

Consequently, Profit after tax (PAT) grew by 48.7% to ₹5.80 billion in Q1 FY2025 as against ₹ 3.90 billion in Q1 FY2024. Return on Average Equity (ROAE) was 19.1% in Q1 FY2025 compared to 14.7% in Q1 FY2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.