SUMMARY
The transaction is seen as a distress sale for Wadhawan Group Capital
Bansal had also acquired an NBFC company CRIDS last year
The Flipkart cofounder's portfolio companies include Ola, Vogo, Ather Energy and others
Flipkart cofounder and former CEO Sachin Bansal has acquired Mumbai-based insurance company DHFL General Insurance from Kapil Wadhawan-led financial services group Wadhawan Group Capital (WGC) for INR 100 Cr ($14 Mn). The deal is seen as a distress sale for WGC, which used to run the bankrupt homegrown company DHFL.
Founded in 1984, DHFL is a 100% fully owned entity of WGC. The company has been known for over three decades for offering affordable housing finance to the middle and lower-income category. The parent company WGC also owns financial services companies such as Aadhar Housing Finance, Avanse Financial Services, DHFL Pramerica Asset Managers, DHFL Pramerica Life Insurance and DHFL General Insurance.
With the acquisition of DHFL General Insurance, Bansal has forayed into insurance space. Last year, Bansal acquired a non-banking finance company (NBFC) called Chaitanya Rural Intermediation Development Services (CRIDS) for INR 739 Cr ($104 Mn). He also took over as the CEO of CRIDS. At the time, Bansal had said that this acquisition was his entry into financial services.
The deal for DHFL has reportedly be routed through Navi Technologies, which was formerly known as BAC Acquisitions. Apart from acquiring companies after his exit from Flipkart in 2018, Bansal registered BAC Acquisitions Pvt Ltd in Bengaluru with his IIT-Delhi batchmate Ankit Agarwal with a vision of developing platforms that can optimise business automation and enable digitisation of processes across sectors.
BAC Acquisitions increased its authorised share capital to INR 7.5K Cr ($1.05 Bn) in January 2019. After which, Bansal had invested another INR 50 Cr ($7 Mn) in the company. In addition to this, Bansal has invested in companies such as Ather Energy ($51 Mn), Altico Capital India ($35.16 Mn), Vogo ($3 Mn), IndoStar Capital Finance ($35.16 Mn) and Ola ($92 Mn).
Interestingly, Sachin Bansal’s Flipkart cofounder Binny Bansal has also backed insurance tech in a big way and is looking to add on to his investments in Acko.
According to an IBEF report, the overall insurance industry is expected to touch $280 Bn by 2020. In the coming years, digital penetration is expected to grow at about 90% annually. Many experts and analytics believe that this market has the potential to absorb a lot of players across various segments. However, high customer acquisition costs and stringent regulations are a roadblock to the growth of digital insurance players amid the existing traditional players like Life Insurance Corporation (LIC) and General Life Insurance Corporation of India (GIC).
