Edelweiss Financial Services share price gained over 2 percent intraday on July 2 after the company decided to sell its 70 percent stake in insurance broking JV.
Edelweiss Financial Services today said it will exit the insurance broking business by selling its 70 percent stake in Edelweiss Gallagher Insurance Brokers Ltd for Rs 307.60 crore.
"The company has entered into an agreement... to divest its entire shareholding (currently 70 percent) in Edelweiss Gallagher Insurance Brokers Ltd, a subsidiary, engaged in the business of insurance broking to Arthur J Gallagher & Co...," Edelweiss Financial Services said in a regulatory filing.
Gallagher, who previously held 30 percent in the business, will now be acquiring all the remaining shares, taking its stake to 100 percent, the filing added.
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The company said, as per the agreement 37,00,000 equity shares of Rs 10 each representing 70 percent of the paid up share capital of Edelweiss Gallagher Insurance Brokers held by the company to be sold for a consideration of Rs 307.60 crore, in one or more tranches, in the manner as set out in the agreement.
The stock was trading at Rs 74.10, up Rs 2.00, or 2.77 percent at 11:27 hours. It has touched an intraday high of Rs 75.40 and an intraday low of Rs 73.35. The scrip was trading with volumes of 217,515 shares, compared to its five day average of 134,516 shares, an increase of 61.70 percent.
Rashesh Shah, Chairman, Edelweiss Group said the sale will provide the company "with the flexibility to reallocate capital and invest in scaling up our fast-growing life and non-life insurance businesses, making this a win-win for both of us."
The transaction is subject to receipt of regulatory and other appropriate approvals (including approval of the Insurance Regulatory and Development Authority of India) and fulfilment of the obligations/conditions prescribed in the agreement.