Paytm, India’s most valuable startup, and its co-founder and CEO, Vijay Shekhar Sharma, announced on Monday that they had reached an agreement to acquire insurance company Raheja QBE for $ 76 million then as the financial services startup seeks to exploit the country’s booming insurance market.
Sharma acquires Raheja QBE via QorQl Pvt. Ltd, a company in which it holds a majority stake, Paytm owning the rest. A Paytm spokesperson told TipsClear it was a cash deal.
Raheja QBE, which provides insurance services to cover an individual’s health, home, vehicles, and also provides coverage for commercial property and injuries at work, is owned by Prism Johnson (51%) and QBE Australia (49%.) QorQl is acquiring 100% of Raheja QBE under the agreement, the two entities said.
Paytm, whose services are used by tens of millions of Indians each month, said the acquisition would help it “democratize general insurance services” in the country.
“Raheja QBE’s strong management team will help us accelerate our insurance journey to the large population of India with the goal of creating a technology-oriented, multi-channel general insurance company with premium products innovative and affordable insurance, “said Amit Nayyar, president of Paytm, in a statement.
In India, only a fraction of the country’s 1.3 billion people currently have access to insurance, and some analysts say digital businesses could be crucial in providing these services to the masses. According to the rating agency ICRA, insurance products had reached less than 3% of the population in 2017.
An average Indian earns about $ 2,100 in a year, according to the World Bank. CIFAR estimated that among Indians who purchased an insurance product, they spent less than $ 50 in 2017.
In recent years, dozens of startups and established banks have launched products to conquer this market. For Paytm, which manages a range of businesses, including a digital bank and online loans, insurance packages could well be integrated into its overall offer.
“This move will help the insurance industry reach new heights by leveraging the large customer base and innovative products offered by Paytm,” said Vijay Aggarwal, chief executive officer of Prism Johnson, in a statement.
The acquisition of Raheja QBE is subject to customary conditions, including approval from the Insurance Regulatory and Development Authority of India (IRDAI), the two companies warned.