The world's largest insurer AXA on Wednesday tied up with India's leading telecom company Bharti Enterprises for entering the life insurance business in India while planning to enter mutual fund, pension and general insurance sectors as well.
AXA will also expand its business process outsourcing operations shortly in India by opening a new unit in Bangalore, which will be the third unit after its existing operations in Bangalore and Pune manning 1,900 people.
Bharti and AXA, which will form a 74:26 joint venture, will invest Rs 500 crore (Rs 5 billion) over the first 3-4 years of operation, which is expected to start from the first half of 2006, subject to the necessary approvals from Insurance Regulatory and Development Authority, Foreign Investment Promotion Board and other statutory bodies.
Announcing the tie up, Bharti chairman Sunil Mittal said the company was willing to partner AXA in mutual funds and pension as well.
AXA Asia Pacific group chief executive, Les Owen said the insurer may have more than 26 per cent stake in the proposed mutual fund arm with Bharti.
The insurer, which manages assets worth $1 trillion worldwide, would also bid for pension foray possibly with Bharti.
Though there are no immediate plans to enter the general insurance space, he said AXA might look at number of Indian companies having expertise in motor and mortgage for possible tie up.
In life insurance, he said Bharti AXA will strive to become one of the five leading life insurers in the country with a countrywide presence through multi-channel distribution network.
Owen said the joint venture with Bharti was an opportunity for AXA to enter the Indian life insurance market, one of the most attractive emerging insurance markets.
"India is one of the fastest growing economy and a huge market with more than 1.1 billion people. This coupled with a large middle class and increasing income levels will drive growth in insurance market," he said.
Bharti AXA will leverage the telcom major's customer base in India to sell the insurance products, Bharti said.
"The insurance sector in India provides mega opportunity for private players like us. Despite strong growth in recent years, nearly 80 per cent of Indian population is without life insurance coverage," he said.
Bharti AXA Life will add on the list of 13 existing private insurers in the country.
There are at least four players who are about to enter the life insurance business within a year, including Anil Ambani's ADAE group which is to takeover AMP Sanmar.
South African insurer Sanlam has also tied up with Shriram group to enter the arena soon after it gets licence from IRDA.
Punjab National Bank had obtained Reserve Bank of India nod for foraying into the life insurance business while Bank of Baroda and IDBI are also keen to enter this segment.
At present, there are 13 private life insurers -- ICICI Prudential, Bajaj Allianz, Birla Sunlife, HDFC Standard Life, Tata AIG, SBI Life, Max New York Life, Aviva, ING Vysya, OM Kotak Mahindra, Metlife, AMP Sanmar and Sahara Life.