Bajaj announces demerger into 3 new entities

After much speculation of a demerger, one to the effect was finally anounced on 17th May. The Bajaj’s business will be rolled off into 3 new companies with the existing Bajaj Auto Ltd continuing as the holding company which will also have a mammoth Rs 6,000 crore in cash.

Under the new scheme of arrangement the auto businesses will come under the Bajaj Holdings and Investments Limited (BHIL),it will also have 1,500 crore in cash and the Financial services company which includes a joint venture with the UK insurance major Allianz will continue operations under as Bajaj Finserv (BFL).It also includes consumer finance, windpower projects and Rs 800 crore in cash.

Rajiv Bajaj will continue as the MD and CEO of BHIL whereas Sanjiv will manage BFL and remain the Executive Director of BHIL. Rahul Bajaj will remain the chairman of all the three companies.The board of the two new companies will have four members comprising Rahul,Madhur,Rajiv and Sanjiv Bajaj. However the BAL board will not be tampered with.

Source: The Economic Times, www.livemint.com

HDFC buys out Chubb in insurance JV

HDFC bought out the 26% stake of Chinese insurance major in the JV whose book value expected to be around Rs100 crores would make the deal worth Rs 26 crore.The General Insurance Venture was set up in 2001.

The Insurance Regulatory and Development Authority(IRDA) has been approached by HDFC to clear the Buy-Out.Ergo,the German reinsurance company is speculated to be the lead runner in the race to pick up the Chubb stake,till then,as the HDFC authorities say the JV will be fully owned by them.

Indian insurance regulations limits foreign institutions to own a maximum of 26% stake in insurance ventures.The limit might be raised to 49% but not without political opposition.

Source: Mint