(Recasts with interview with Sun Life CEO)
By John Tilak and Devidutta Tripathy
TORONTO/MUMBAI, Dec 2 (Reuters) - Canada’s Sun Life Financial Inc signalled the significance of the fast growing Indian insurance market by revealing plans on Wednesday to increase its stake in life insurance joint venture Birla Sun Life Insurance, to 49 percent.
Toronto-based Sun Life, which currently owns 26 percent of Birla Sun Life, is buying an additional 23 percent in the venture from partner Aditya Birla Nuvo Ltd, which will keep the remaining stake. Sun Life will spend 16.64 billion rupees ($250 million) on the purchase.
The deal, which is expected to close by March 2016, comes months after Sun Life Chief Executive Dean Connor told Reuters the company was interested in raising its stake in the venture.
Birla Sun Life Insurance is among the top five private insurers in India and aims to crack the top 3 at some point.
“As Canada’s only lifeco in India, we’re doubling down on an important joint venture. It’s a natural step,” Connor said in an interview on Wednesday. “What it means for our shareholders is a bigger share of future growth in a really important market.”
“It’s a country that is seriously underpenetrated for insurance in an economy that is growing quickly,” he added.
The deal is the latest in the Indian insurance sector this year after the government raised the foreign investment cap in the $50 billion sector to 49 percent from 26 percent earlier.
Japan’s Nippon Life and France’s AXA recently announced deals to raise their stakes to 49 percent in their respective Indian insurance joint ventures.
Sun Life has a presence in seven Asian markets and is looking at a range of potential deals in the region, Connor said.
The company would be open to insurance and asset management deals in India, but only in conjunction with the Birla group, he said.
Sun Life also owns 49 percent of Birla Sun Life Asset Management, one of the largest mutual fund companies in India. (Reporting by Devidutta Tripathy; Editing by Subhranshu Sahu and Andrew Hay)