Toronto—(PHStocks)—Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) (PSE: SLF) and Aditya Birla Nuvo Ltd (ABNL), a part of the Aditya Birla Group (ABG), has announced an agreement for Sun Life to increase its ownership in Birla Sun Life Insurance Co. Ltd (BSLI) from 26% to 49% by purchasing additional BSLI shares from ABNL for consideration of Rs. 16.64 billion (approximately C$340 million).
BSLI is one of two India joint ventures established between ABG and Sun Life. BSLI commenced business in 2001 and has a customer base of 1.6 million individual policyholders and an extensive distribution reach across 418 cities through a network of over 55,000 advisors in 489 branches. Sun Life’s second joint venture with ABG is Birla Sun Life Asset Management Co. Ltd, the fourth largest mutual fund company in India with assets under management of Rs. 1,387 billion (approximately C$28 billion), in which Sun Life owns 49%.1
The increased stake in BSLI aligns with Sun Life’s objective of expanding its presence in markets with strong growth opportunities.
“Increasing our ownership position in BSLI, one of India’s leading private life insurers, in partnership with a well-respected partner in Aditya Birla Group, in the world’s second most populous country with strong growth prospects, is exactly on strategy and supports our aspirations for Sun Life Asia as one of our four pillars of growth,” said Dean Connor, President and Chief Executive Officer, Sun Life Financial.
“In Sun Life, our joint venture partner, we find many synergies that are reflective of their belief and commitment towards the Indian market. Both Sun Life and ABNL have closely partnered in building this business to its current scale, investing heavily in both capital and resources. I am confident this move will only strengthen our long standing partnership and help realize our vision of being a top three private life insurer in India,” said Kumar Mangalam Birla, Chairman, Aditya Birla Nuvo and BSLI.
“We are pleased to be increasing Sun Life’s presence in India where we see significant growth potential with a strong partner in an established business with a growing client base. Today’s announcement builds upon our recently announced investment in Vietnam which will see us become a majority shareholder of our business there,” said Kevin Strain, President, Sun Life Financial Asia. “Across Asia, we are building strong distribution and product strength to help clients achieve lifetime financial security.”
BSLI has a strong and professional management team. Sun Life and ABNL have partnered closely since 2001 to invest in and build the business to its current scale. BSLI spans all customer segments nationwide to help clients secure their financial futures.
The acquisition is expected to be accretive, adding C$0.01 per share to Sun Life’s earnings in 2016. The transaction is expected to close by the end of Q1 2016, subject to regulatory approvals and customary closing conditions. The acquisition will be financed using cash and is not expected to impact the Minimum Continuing Capital and Surplus Requirements ratio of Sun Life Assurance Company of Canada.