Time was of the essence, which decided that Reliance Capital's bid was the best, considering that this would enable shareholders of AMP Sanmar to exit the venture at the earliest.
At the same time, the interests of policyholders and the staff would be taken care of unlike had the joint venture been taken over by an existing Indian player.
"It would have taken that much longer to get regulatory approval had we opted to sell the business to an existing player," said Graham Meyer, CEO, AMP Sanmar Life Insurance Company.
As per Sections 35 & 36 of the Insurance Act, it would have been a long process to merge the two companies, as a single entity cannot hold two licences. Price consideration hence was not the sole criteria in the choice of the buyer.
"This was not a distress sale as the company is doing very well. It was a strategic decision taken by the AMP group," said Meyer, in an exclusive interview to Business Standard.
There were a host of existing players keen to buy the Chennai-based life insurance company, among a number of foreign insurance companies willing to buy out AMP's 26 per cent stake in the outfit.
Meyer however, refused to divulge the details of the deal struck, stating that as per the clause in the agreement for sale, neither party can reveal the consideration amount.
Commenting on the preference of Reliance Capital over that of an established foreign insurance major, Meyer said it would have taken that much longer for the Insurance Regulatory and Development Authority to undertake a due diligence of the foreign player.
Policyholders' interests have also been protected alleges Meyer explaining that the existing style of business could continue. Reliance Capital would continue policies at the same terms and conditions.
"Had we sold to an existing player in the market, this could have resulted in difference in business style in terms of sales and products," he said.
Reliance Capital being a maiden player is likely to continue with the terms and conditions of the existing policies. Sale to a foreign entity would have also put policyholders on an equal footing.
The 900-strong staff base of AMP Sanmar also feels more secure with the choice of Reliance Capital as the acquirer. Had the operations been acquired by an existing player, there would have been some level of duplication in terms of infrastructure, said Meyer. AMP Sanmar has over 90 offices across the country.
Responding to why Sanmar chose to exit the life insurance venture, Meyer said that it not knowing the insurance business, Sanmar was not willing to continue unless they found a foreign partner willing to buy out AMP. However, this would not necessarily have been in the best interest of all the stakeholders.
The Australian AMP Group will continue with its investments in the country, having partnered with Asian Development Bank to invest in various infrastructure projects in India.
"India is emerging as a global market and needs large investments," said Meyer, adding that AMP could invest incremental funds into the country even as it is exiting from the life insurance market.
