Aviva has completed the acquisition of an additional 23 per cent share in Aviva Life Insurance Company India Limited (Aviva India) from its joint venture partner Dabur Invest Corp.
The acquisition follows recent regulatory changes which allowed Aviva to increase its shareholding to 49 per cent, being the maximum permitted under India’s foreign direct investment limits (FDI). The transaction is expected to have a neutral impact on Aviva’s IFRS Net Assets. In 2015, Aviva India contributed GBP36 million to Aviva’s IFRS Net Assets and GBP4 million to Aviva’s Profits.
Aviva India is a life insurance joint venture between Dabur and Aviva which was formed in 2001. As is customary in such joint venture arrangements, the original agreement between the parties includes options exercisable in the event of future changes in FDI for which Aviva pays an annual option price to Dabur. These options allow Aviva to purchase, or Dabur to sell shares at prevailing fair market value5 such that Aviva would hold up to the maximum number of shares permitted under FDI.