Mahindra & Mahindra Ltd. and Manulife have agreed to set up a life insurance joint venture in India, five years after they got together to sell mutual funds in the world’s fourth largest stock market.
The Mahindra-Manulife life-insurance JV aims to offer long-terms savings and insurance for the hinterland, according to a statement on Thursday. The idea is to marry Mahindra’s deep distribution in rural with Manulife’s agency in urban to become “the #1 life insurance company for rural and semi-urban India, and serve Urban India with tailormade solutions”.
Mahindra and Manulife have committed to invest ₹3,600 crore each in the JV, with ₹1,250 crore expected from each partner in the first five years. The JV is subject to regulatory approval.
Kotak Investment Banking acted as financial adviser and AZB & Partners acted as legal counsel to Mahindra Group for this deal. Debevoise & Plimpton LLP acted as legal counsel to Manulife.
“With a focus on leveraging technology, the joint venture will build an efficient, customer-centric insurer in India,” Anish Shah, Group CEO and MD at M&M, said in a statement. “We are confident that this joint venture offers a very compelling opportunity to create meaningful value for our shareholders.”
Mahindra Manulife Mutual Fund
To be sure, this isn’t the first collaboration between one of India’s largest and diversified conglomerates and the Canadian financial services company.
In 2019, M&M Financial Services Ltd.—through its asset-management unit and with Manulife—set up Mahindra Manulife Mutual Fund, which came to life in the following year. Today, it has ₹31,450 crore as assets under management (AUMs), delivering a compounded annual growth rate (CAGR) of well over 20% over the past 3-5 years, according to data from the Association of Mutual Funds in India (AMFI) and on its own website.
The collaboration leveraged Mahindra’s domestic market strength, particularly its reach in rural and semi-urban India, with Manulife’s global wealth and asset management expertise. The life-insurance JV is essentially an extension of that idea with a different financial product.
Mahindra Manulife Life Insurance
The Mahindra-Manulife life-insurance JV is seen in line with India’s “Insurance for All” by 2047, as envisioned by the Insurance Regulatory Authority of India. According to the regulator, India’s life insurance market has surpassed $20 billion, growing at 12% CAGR over the past five years.
These tailwinds position India to become world’s fastest growing life insurance market over the next decade, putting it on track to become the fourth largest globally, according to a McKinsey report.
The Mahindra-Manulife JV aims to tap into this very opportunity. They will now apply for an insurance licence in India.
“We have a trusted partner in Mahindra Group, with whom we already have a successful asset management collaboration,” Manulife CEO Phil Witherington said in the statement. “This (Insurance JV) will further strengthen our diverse portfolio and positions us for tremendous growth in a mega economy of the future.”
