Paytm, India's most valuable startup and its co-founder and CEO, Vijay Shekhar Sharma, announced Monday that they have reached an agreement to acquire general insurer Raheja QBE for $ 76 million as the financial services startup plans to take advantage of the country's booming insurance Market.
Sharma acquires Raheja QBE through QorQl Pvt. Ltd, a company in which he holds the majority, while Paytm owns the rest. Prism Johnson (51%) and QBE Australia (49%) own Raheja QBE, which provides insurance services to cover a person's health, home, and vehicles, and to protect commercial property and workplace injuries. QorQl will acquire 100% of Raheja QBE as part of the agreement, the two companies said.
Paytm, whose services are used by tens of millions of Indians each month, said the acquisition will help democratize general insurance services in the country.
"Raheja QBE's strong management team will help us accelerate our path to insurance for the large population of India to create a technology-driven, multi-channel general insurance company with innovative and affordable insurance products," 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 companies could prove crucial to making these services accessible to the masses. According to the rating agency ICRA, insurance products had reached less than 3% of the population by 2017.
According to the World Bank, an average Indian earns about $ 2,100 a year. ICRA estimated that Indians who bought an insurance product spent less than $ 50 on it in 2017.
In recent years, numerous startups and established banks have launched products to win this market. For Paytm, which operates a number of companies, including a digital bank and online loans, insurance bags could fit well into the overall offering.
"This move will help the insurance business reach new heights by leveraging Paytm's large customer base and innovative products," said Vijay Aggarwal, general manager of Prism Johnson, in a statement.
The acquisition of Raheja QBE is subject to customary terms, including approval from the Indian Insurance Supervision Agency (IRDAI), the two companies warned.