Ladies and gentlemen, good day and welcome to Bajaj Finserv Limited analyst conference call hosted by JM Financial Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I will hand the conference over to Mr. Ajit Kumar from JM Financial. Thank you, and over to you, Mr. Kumar.
Thank you, Dheeraj. Good afternoon, everyone, and welcome to the conference call of Bajaj Finserv Limited to discuss the fourth acquisition of a stake in Insurance Joint Venture. First of all, I would like to thank the management of Bajaj Finserv Limited for giving us the opportunity to host the call. As always, we will have the opening comments from the management team, after which we will open the floor for Q&A. From the management side today, we have Mr. S. Sreenivasan, President, Insurance and Special Projects, Bajaj Finserv Limited; Mr. Ramandeep Singh Sahni, Group CFO; Mr. Vipin Bansal, CFO, Bajaj Allianz Life Insurance Company Limited; and Mr. Anckur Anil Kanwar, CFO, Bajaj Allianz General Insurance Company Limited. With that, I would like to hand over the floor to Mr. Sreenivasan for his opening comments. Thank you, and over to you, sir.
Good evening, everyone. This is a short call mainly to address the announcement that we made on 17th of March, 2025, announcing that the Bajaj Group will acquire 26% stake of Allianz in Bajaj Allianz General and Life Insurance Companies. The acquisition of Allianz as a key stake will increase the Bajaj Group's ownership to 100%, while Bajaj Finserv itself will increase its stake from 74% to 75.01%. The 24-year-old joint venture agreement between the Bajaj Group and Allianz SE in respect of insurance businesses will stand terminated upon the completion of the first round of acquisition of at least 6.1% and reclassification of Allianz from being a promoter to investor. The stock exchange filing was also attached to the precedent we made on 17th. The total consideration for BAGIC Bajaj Allianz General Insurance is INR 13,780 crore for the 26%, and for BALIC, it is INR 10,400 crore.
In total, the enterprise value of BAGIC was agreed at INR 53,000 crore and BALIC at INR 40,000 crore. The entire acquisition is subject to customary approvals, including regulatory approvals, specifically the Competition Commission of India and the Insurance Regulatory and Development Authority of India, or IRDAI. Bajaj Finserv Limited, as I mentioned before, will acquire approximately 1.01%. Bajaj Holdings and Investment Limited, approximately 19.95%, and Jamnalal Sons Private Limited, not a promoter group company, will acquire approximately 5.04%. With this, I hand over to you for any questions that you may have. The purpose of this call is predominantly a Q&A. We do not have any specific presentation.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, you will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from line of [Rohan Mehta] from Ficom Family Office. Please go ahead.
Hello, sir. Thank you so much for taking my question. I had two questions. First is, what is the strategic background for Bajaj Holdings and Jamnalal Sons acquiring a remaining stake in the insurance companies rather than Bajaj Finserv itself? How does this align with Bajaj Finserv's long-term vision?
We announced the deal at the exit of Allianz or Allianz informed us of their desire to exit the joint venture in the Life and General Insurance ventures in October 2024. Since then, we have been engaged in constructive and amicable discussions, as we mentioned in the precedent, to ensure a smooth exit. This exit is a little bit unusual compared to the earlier exits. I think a number of exits have happened in the insurance industry in the sense that the existing partner also informed us of their intention to remain committed to the Indian market. From press reports, we believe they plan to reinvest and start another venture in India. Therefore, it became very critical for us to ensure that the exit happened very fast.
From a Bajaj Finserv perspective, we already have 74% in insurance companies, and we needed only to acquire 1% to give us effective control over the insurance ventures. We would then be able to build the business and participate in the growth prospects of the Indian insurance industry without the pressures of joint ventures or shareholding agreements. However, in order for the transaction to get completed, Allianz had to sell the entire 26%, and therefore, we had to give them a way out in as quick a manner as possible because it was not in the interest of Bajaj Finserv or the insurance companies that a partner who has announced their exit continues for longer than what is required as a promoter or as a significant investor in the company. After evaluating all the options, we believed that was the best option.
BFS's own surplus position does not permit a larger acquisition than more than 1% stake, and it also does not require 100% control, making such a significant investment, which is about 9% of its market cap now, and it was a bit higher, more than 10%, at the time we started the discussion. The different options were evaluated, and the need for a fast exit, a certainty of contract, and a committed way of exiting, this was the best option that came out, and therefore, we proceeded with that.
Sure, sure. My second question is, what role can we expect Mr. Rajeev Jain to play in Bajaj Finserv post-March 31st? What has been the communication to Finserv regarding his involvement in Bajaj Finserv and juggle his possible role in Bajaj Finance alongside?
This call is specific to the press release we made on 17th March. That has nothing to do with either Mr. Rajeev Jain or his role in Bajaj Finance or Bajaj Finserv. I think that question, as you should ask in a different forum. We had an investor call last month. We do have other investor interactions where that question can be addressed, but rather this question be answered in a different forum.
Sure, sure. Absolutely, sir. Last question is, on the listing of BAGIC and BALIC, have you thought about appointing an investment banker or any timeline do you have as of date?
I think you—I don't know if you saw the TV interviews given by Mr. Sanjiv Bajaj today. As you know, the insurance regulator has asked some of the larger companies to give a glide path on listing. No specific time frame was given. However, in our case, it is unique. We have an existing joint venture partner of 24 years going out and coming back. We have a lot of work to do in rebranding the company. Under the Companies Act, you have to keep the whole name of the company for two years, and again, you have to change all your signage, stationery, and all other things. With such an event in the offering, the question of listing immediately does not arise. Additionally, there are other developments in the industry.
There is a proposed insurance bill, which is proposing licenses for multiple classes, single license for multiple classes of business. We would still not know the contours of that until the bill has been passed and appropriate regulations have been framed by the authority. There are also other developments such as Indian accounting standards, which can significantly change the financials of insurance companies. Therefore, once all these tailwinds are played out over the next two to three years, we may—the board of the company—and will appropriately consider what is the time frame depending on the then market conditions.
Sure, sure. Thank you so much for taking my question.
Thank you. Next question is from line of Avinash Singh from Emkay Global. Please go ahead.
Yes, good evening. Thank you for the opportunity. A couple of questions. The first one is that, particularly in BAGIC, you have a scenario of excess capital, and given the sort of different positions taken by the two partners, you have not had kind of a very clear path. Now, does this kind of a joint venture agreement ending provide you some clarity around what you want to do with the excess capital? Even considering a reasonable amount of growth, because you are a reasonably profitable company as well, your capital or solvency capital in your BAGIC [audio distorion] . Any sort of a thought on that? I mean, of course, you answered it very clearly on the IPO timeline, but not about timeline.
As and when IPO happens, as and when, will there be kind of any idea at this point who will be the kind of the diluting promoter or investor? I mean, is it the Bajaj Finserv that will dilute, or will it keep sort of at a 74, 75, and that dilution will happen from the other two investors/promoters? These are my two questions. Thanks.
Yeah. The first question is, see, at the moment, our focus is on completing this transaction, and we have to do it as fast as we can, subject to obtaining the regulatory approvals. Under the regulations, a particular company cannot be promoter of more than one insurance company, and therefore, the stake has to come down to a certain level before the promoter can become an investor. However, given the fact that the existing partner will also continue as a competitor in the market, their remaining as an investor for a long period is also not advantageous. Coming to the excess capital, it is there, but there are one development, which is the risk-based solvency margins, which is being discussed through several committees of IRDAI.
A couple of rounds have already happened, and then there is expected to be more rounds, and we have to wait and see what the new solvency regime is going to be like. Having said that, being the most solvent, we believe wherever the new solvency margin is set, we are likely to be more solvent than the average company in the market. It is not a call that we will take now. Over the next couple of years, once we have full control of the company and we have handled the immediate exigency of transitioning from a joint venture to a solely owned company, the board of that company will take a view along with the shareholders as to what is the right way, how much is to be kept in the company.
We were taking dividends, as you know, till last year, and the dividends have been increasing, particularly in BAGIC. There was a substantial increase last year. Having said that, until we exit now, there is no point in us paying dividends where an existing partner will benefit. We will have to hold it till the transition, till the purchase is complete. Coming to your second question, what will happen in the case of an IPO? That is some way down the line, as I told you earlier. At that time, we will evaluate if the companies need money, how much money they will need depending on the new risk-based solvency, and at that time, an appropriate decision will be taken.
At this time, there is no visibility or decision or any proposal at our side as to any agreement or anything which indicates what priority will be given, whether there will be an IPO or a new issue. All those issues we will tackle as and when the situation arises and when an in-principle decision to do an IPO is made.
Thank you. Thank you. Next question is from line of Rahil Shah from HSBC. Please go ahead.
Hello.
Yes. Hello.
The line for the participant dropped. We move on to the next participant. Next question is from line of [Bhavesh Kanani] from Swan Investments. Please go ahead.
Thank you. Thank you for taking my question. Going back to the first question that was asked, some more color on that in the sense that we would have had infused money into Bajaj Finserv, and then in turn, Bajaj Finserv would have bought out Allianz stake. The merits of this structure versus what has been done, if you can highlight on this structure?
As I mentioned earlier, Bajaj Finserv's surplus position does not permit a larger acquisition than 1%, and strategically, 75% acquisition was enough given the size of the deal and the size of the company that we are buying. The CICs cannot borrow money. Not only that, IRDA does not permit borrowed funds to be used for acquiring. We looked at other options, and every option, obviously, a contract like this where a partner is exiting and the size of the deal, it was very important that assurance should be given that the amount is available and it has to be owned funds, not from a leveraged entity, and it had to be done very quickly.
The Bajaj Group, which has been the joint venture partner of Allianz for the last 24 years, stood behind Bajaj Finserv and decided to commit up to 24.99%, which was evaluated as being the fastest and smoothest way to ensure the exit, subject, of course, to the approval from the CCI, IRDAI, the ROC, and other relevant approvals. Given the total deal size of INR 24,000 crore, this was an outstanding sign of commitment, and we believe the valuation that we have done is fair for both parties. We look at this as a win-win deal, a fast exit for Allianz, a reasonable price for a deal that considered the risks of time, risk of getting approvals, risk of any other approvals required. Clearly, the more the delay, the greater the risk of the deal falling through.
Therefore, this deal is possibly the largest in the insurance sector and even in other sectors in recent times, and it is a matter of pride for us and for India to demonstrate the strength of domestic capital and a sign of confidence that complex businesses such as life insurance and general insurance can be operated successfully by Indian domestic entities with long-term vision.
Thank you. Thank you. Participants, you may press star and one to ask a question. Next question is from line of [Mahir] from Wealth Managers. Please go ahead.
Good evening, sir. Thank you for taking my question. I just had actually a simple observation and a comment and implied question in that if you are ready to answer. It's just a small. First of all, congratulations on having the deal. It's been a long journey for us, and for all long-term investors for the last 10 years, 12 years have been trying to understand what will be the status of this deal, and finally, it has come true. Congratulations to the entire team for that on both BAGIC and BALIC.
With this, I hope that the much awaited capital efficiency, whether for life insurance and for general insurance, while general insurance remains reasonably well efficient in terms of ROE, I think in terms of embedded value, return on embedded value, or whichever way we look at life insurance efficiency, I think that should help us now come with excess capital as well as dividend policies much more favorable to investors as we go ahead. Hope we get that clarity.
Yes. At the moment, as I told you, our focus is completely on the transition. We cannot underestimate the fact that the transition is quite complex. These are two large companies with over INR 40,000 crore of gross premium, employing nearly 35,000-40,000 employees, and we have to look at all our stakeholders and to see what the reaction is. We do not intend to be relaxed in any manner. We will be spending time on branding, changing the brand. We will have to look at all our stakeholders, our customers, our reinsurers, our partners, and both the company and us will be engaged over the next few months, first of all, to wait for the regulatory approval, and thereafter, after the acquisition is complete, to complete the transition in a manner that is smooth for the employees.
Coming to the capital I already mentioned, because of the risk-based solvency and the other development, we'll wait and see the composite license and the things being talked about, but I presume by about a year, year and a half, we'll have clarity on that. To demonstrate what exactly is the strategic intent of BFS in this. As you know, a joint venture, we have had great partnership with Allianz for 24 years. We have built two great businesses, both of them in leading positions in their respective sectors. Having said that, the flexibility and the strategic orientation of Bajaj Finserv and Allianz were different, and therefore, we had to move on without the pressures of a joint venture agreement.
We have demonstrated the capability of Finserv to manage complex businesses such as insurance over the last 10 years, particularly in the life phase where we have transformed the entire life business after the Indian control was enforced by law in 2015, and the continued profitable performance of the general insurance business. Now, some of the exciting and prosperous future developments that we think shareholders can expect from BFS with a single ownership is the benefits that could arise out of tailwinds in the insurance sector, which include the rollout of [India], the proposed reforms in the insurance act, which will potentially permit multiple classes of business under a single license, and clearly, with a single brand in both the sectors, it does put us in an advantageous position.
The continued growth of the insurance sector and our insurance companies without the pressures of a joint venture, which I mentioned, which helps use the power of the Bajaj brand as the India growth story unfolds. Thirdly, the ability of the insurance ventures to gain by sharing of best practices, capabilities around innovation, technology, and data science of the group, as well as the strong human resources platform created under our One Finserv program, about which we have talked in a couple of slides in our investor presentation. We already do some bits of it, but I think our flexibility in enhancing this after the acquisition will be significantly higher. We will also have potential for expansion in the future to tap opportunities in pensions, offerings for NRIs, and any other opportunities that the under-penetrated sector will present.
There have been some difficulties for us in fully exploiting these, but I presume that with the acquisition, these will go away. Finally, the ability of the insurance ventures to evaluate strategic alliances and potential inorganic opportunities should they arise in the sector. We will have greater flexibility in looking at them and seeing whether they add value or not, which under, obviously, the earlier structure, was a lot more difficult with the kind of joint venture agreement that we had. This clearly is our strategic intent in getting the 75%, the flexibility, and having the ability to use the brand to the full effect.
The line for the participant dropped. We move on to the next participant. Next question is from line of Rahil Shah from HSBC. Please go ahead.
Hello. Thanks for giving me the opportunity. Sorry, I dropped in between, but can you clarify on one thing? Will the funding be self-funded by all the entities?
Yes. As I mentioned before, leveraged funding is not permitted under law, and it will be self-funded by the two entities who are promoter group entities supporting us in this acquisition. We believe that we have the ability to do the funding.
Sure. Once this transaction is completed, can we expect higher dividend payout ratios from the fund, or that will remain unaffected?
Similarly, I think BAGIC has a dividend policy of 30%-50% of the profits. Given the obviously subject to solvency levels, which will be reviewed after the risk-based capital regime is fully rolled out, we will have to stop it for the time being until the acquisition is complete. These are things that the board of the company will review along with the shareholders, and we will take an appropriate decision at that time. We, as a group, look at different policies very carefully once a year across the group, depending on the performance, the needs of capital, and the ROEs and other relevant factors. We will be looking at it maybe once this acquisition is complete. As I said earlier, our initial focus will be on managing the transition for at least 12 months.
Sure. Just last, again, a clarification on the solvency ratio under the risk-based capital regime. Will it decrease from the current levels? What's your assessment? I mean, ideally, the general sense is that it should increase. Can you give some sense?
We do not know yet. I think there have been preliminary discussions, and usually, in a change like risk-based solvency, the regulator starts with the most pessimistic look, and then they will look at how many companies will get affected. In Indian context, this also involves, obviously, the public sector companies, the GI sector, as well as, as I see, the public sector. I presume these are the relevant factors the regulator will take, and they are closely engaged with the actuarial teams from all the companies. They will do three, four rounds to set the stress factors required, the type of actuarial methodology changes that are required. In general, we have no view now. We do not know that yet. Wherever it is set relative to the market, we are better off.
Okay. Sure. Yeah, this helps. Thank you.
Thank you. Next question is from line of [audio distortion] from Investec India. Please go ahead.
Thanks for the opportunity. The first question is in terms of funding this transaction. We see that there is around INR 18,000 crore of investment, which is sitting on Bajaj Holdings' balance sheet. That will be monetized to fund this transaction?
That's a question for Bajaj Holdings to answer. When you see the previous quarter's press release, Bajaj Holdings has announced that anyway they were planning, I think, two quarters ago or last quarter, I don't remember, that they are realigning their investments in accordance with their decision to convert into a core investment company.
Okay. Secondly, in terms of operations, I think there has been some reinsurance arrangement with Allianz that Bajaj, mostly Bajaj entities, have been engaging with in the past. Do you see any impact on profitability because those arrangements will continue in the future as it is, or do you see any changes to that?
Yeah. First of all, those arrangements are outside of our joint venture agreement. Secondly, predominant reliance on reinsurance as requirement of reinsurance in general is higher for BAGIC. And in BAGIC Allianz, I think, only last year started participating. They were not very active in the Indian market for a few years before that for various reasons. They started, but they are still not the largest or the most significant player. BAGIC deals with almost all the big reinsurers. Having said that, this was a very amicable settlement, which both of us feel is a win-win deal for both Allianz in terms of fast exit and the fair price, and also for us, a good price and the ability and the flexibility of driving the strategic orientation. We do have an understanding that existing contracts, obviously, will be honored because this is under regulation.
Beyond that, on an arm's length basis, we will continue to look at them whenever the need arises if they have the capacity and the terms are acceptable to the companies. They can deal with them. There is no specific bar on those. Whatever continuing, there will be a support provided until the transition is complete.
Sure. The next is that was there any involvement of Allianz in terms of any other operational aspect, whether it be technology or any other operational aspect which will change?
The previous core platform, which I think three, four years ago, we started transforming for both companies, BALIC with Infosys and BAGIC with TCS. There is an agreement for continuity on that, and we have already signed that agreement. That is, again, the terms and everything are separately agreed for that by the two companies.
In addition, I think there are some small value-added services which we get from their local firms, Allianz partners. It is also vice versa. They are more dependent on us than we are on them. We believe those contracts will also continue. Overall, if you see, our dependence on Allianz from an operating entity's perspective is very, very limited, whether it is reinsurance or the tech support they give us or anything else. That has been the case with, I think, all the foreign partners in India. Once they came on board, initial few years, the tech capabilities, underwriting, change management capabilities were all deprecated from the western world. In the last decade or so, you will see that the partners' contribution as such has gone down significantly, and our companies are very well managed independently.
I think all the capabilities which you need to run scale-sized insurance companies are now built into each of the companies. Hence, we do not see any disruption from the exit.
Sure. Sure. What will be the rough timelines of this deal, by when this will be completed?
It all depends on the regulatory approvals, but we have written certain tranches there. The first is to ensure that a minimum stake is bought. We think it should be completed in about 15 months, but that is from now. That is the upper limit that we are looking at. We'll have to wait and see how long it takes for regulatory approvals. We think it should not take too much time, but we don't know. I mean, it's for the regulator to decide. Since an existing promoter group is buying, we believe that will be faster, that due diligence will be faster, we believe. We believe there is no new shareholder coming in, or even from a competition commission, the market shares won't change because of the acquisition.
Indexer points you'll arise.
Huh?
In some defense. What I'm going to bold out.
Yeah. We are hoping that that will come through fast, but let's wait and see.
Sure. Sure. The last question is instead, Allianz is planning to re-enter India or starting their insurance venture again. Do we have any anti-poaching agreement, or how do we safeguard our human resource from that new venture?
We have a reasonable anti-solicitation agreement.
Great. Great. Thank you. That's it from my side.
Thank you. Next question is from line of [Mahir Shen] from Motilal Oswal. Please go ahead.
Yeah. Hi. Hi, sir. Like you mentioned, there shouldn't be any challenges, but any of the regulations that could be a hindrance or it could be a roadblock to these transactions that you would see?
At the moment, we are not anticipating, but the regulators, we cannot pre-judge the regulators, and we do not like to do that as well. We'll go through the process. We are hoping it will come through fast, reasonably fast.
Okay. Okay. Second question was, BAGIC spoke about the pros of getting the complete ownership, but obviously, there are pros of having a JV partner who has a global experience in terms of products, in terms of geographies, underwriting, many aspects which India is still kind of at an evolving stage. Just a hypothetical question, had this not been something which would have been pressing or time would have been, in essence, here for the exit that had to be given to Allianz, would you have considered another JV partner who would be a foreign partner or any other JV partner that you would have in this?
I think, as you see, most of the leading companies, barring very few, have already been in India. Many have left India as well. I think the capability that we have built over the years is not just in insurance, but across the Bajaj Group in terms of data science, in terms of technology, in terms of quality of people. We now have the capability to run the business. We understand risk. The entire management teams are completely homegrown. Both companies are purely domestic, the CEOs, the senior management teams. Whatever capability we have now is completely by the companies themselves. They are independent of the promoters. We do not see any specific area in which we would need expertise going forward. Yes, reinsurance arrangements we already have, and we have one of the strongest and most versatile reinsurance programs in Bajaj.
Across most of the major names are there. You name Berkshire Hathaway is there, and Munich Re, and Swiss Re. All of them are partners with us for years. This is something we have built our corporate business on for a number of years. We do not see any specific area in which we need to give up the flexibility of designing our own future by bringing in a joint venture partner.
Sure. Last question, sir, either in BAGIC or BALIC any product categories that would earlier not have been really kind of got into and which now you can get into, is there any thought that is different now?
As I said, it opens up new opportunities and maybe greater opportunities in the pension space, greater opportunity to play the NRI market. There could be potentially now the joint venture agreement was always restricted to the territory of India. That is gone. As of now, we do not have any view on doing that. In the long run, who knows? Maybe something might emerge where we could collaborate abroad.
Got it. Thank you so much, sir.
Thank you. Next question is from line of [Ankin Bhatra] from [India Ratings]. Please go ahead.
Hello?
Yes.
Yes, sir. Basically, the question was on the funding side only. You said that the leverage is not allowed to be built up to acquire this particular stake in the insurance entity. Just wanted to kind of get some understanding because it is a substantial amount. At the BSIL level also, it is a substantial amount which would be required. And 1% stake acquisition at Bajaj's insurance level. Just wanted to get some color around the source of funds. If not external debt, then how will this get arranged?
The two Bajaj Group companies which have offered support to us are investment companies who have assured us that they have the investments or the funding to support us without both are not having leverage. In fact, if you see the entire Bajaj Group barring the lending companies which by nature of the business require to borrow money, such as BFL, BHFL, and to a smaller extent, our securities company which does margin trading finance, no other company has debt. This has always been one of the hallmarks of the group. Therefore, as of now, we do not see a risk that the funding may not be available.
Sir, when you say the holding company, it is the BSIL level?
Bajaj Holdings and Investment, a listed company. All the data is available in the public domain.
Okay. Okay, sir. Okay.
Thank you. Participants, you must press star and one to ask the question. Next question is from line of Deepinder Bhatia from Bayard Asset Management. Please go ahead.
Thank you. First of all, Sreni and team, congratulations on a really large and substantial deal that will provide us even more significant exposure across the group to this prized asset. My question is the first one, I'm not sure has been answered. You have the second one, I think you've touched on already. My first question is strategically, in the last couple of quarters, you had already started signaling a move towards extracting high ROIC, high ROEV on the existing core business. Is any of that direction that you have been guiding in the last couple of quarters going to change in any significant manner, either move more speedily or in any other manner given this parting of ways with your JV partner? That's my first question. I will just lay out my second question also here. You may have touched on this.
I'm sorry I came a little late for this call. With regard to your obligation to list any portion of the combined asset, at what point in time, with what kind of deadline would you need to, if at all, and how much share would you need to list? In what proportion are we likely to see the listing come through to the market? If you have any details on that, that would be great too. Thank you.
Before I answer the second question earlier, there's only a blind spot that the regulator has asked. For the next couple of years, our focus is on transitioning from a joint venture to a solely-owned company. There are significant activities involved in branding, rebranding. We have to do it twice under Indian law because there's a certain period when you have to show the name of the whole company in parentheses below where it's stationary in your signboards. We will be launching the new brand after we get all the regulatory approvals, and we have finished the first tranche, when Allianz will be free to start a new business. Thereafter, we will see there are other significant regulatory developments. There is talk about a new insurance bill with composite licenses. There is IFRS-compliant Indian accounting standard. There is risk-based capital on solvency margins.
When all of these play out, the boards of the companies, which has a very strong panel of independent directors, will take an appropriate decision as to when to list. There is no further thought about that at this moment as to what will happen. As per law, if you are listing, then the first 10% has to be done, and thereafter, you have three years to complete the remaining 15% so that the minimum promoter stake is at 25%. Maximum promoter stake is at 75%. These are things that will play out depending on how the tailwinds play out. In the immediate thing, the focus of the company is coming to your first question. The life company definitely has a focus to improve the margins.
They have put in a significant plan to restructure the business in terms of reducing the exposure to lower margin businesses and improving the higher margin businesses. That will play out in the next 12 months, notwithstanding this. We should see over the next three-four years the BAGIC version 2. In terms of BAGIC, we are already a significantly high ROE company. We do have an excess capital which we will review after this has played out. In the near term of the next 12 months, obviously, there will be some extra cost of transition, particularly on branding, rebranding. We have to, as I said, micromanage some of the areas of business to ensure that there is no business leakage.
Not necessarily that existing competitor will start business soon, but we have to be very watchful on how it is perceived by customers, partners, and other stakeholders.
Do you think that some of the strategic direction, margin enhancement and so on, is there any reason to believe it will move more speedily or any change to the pace of that as a result of this ownership change? Or is it really unaffected in terms of pacing and speed with which or the endpoints that you would have had as your goals, whether or not the ownership structure existed in its original form or in its current newly proposed form?
Yeah. I do not think that is independent of that because both the partners anyway wanted the companies to pursue a high ROE and high ROEV model. That journey was already started a couple of quarters ago. That momentum will continue as we plan. Our annual operating plans are pretty much finalized, and that will continue. We have to be, as I said, watchful of any consequential effects that we have not anticipated which come across, and some amount of management time may go into that. Otherwise, the bigger benefit is the longer term, the flexibility to drive a more holistic strategy for the two businesses across the Bajaj Group, capitalizing on our strengths.
Understood. Thank you very much. Congratulations again, and wish you best luck.
Thank you, Deepinder.
Thank you. A reminder to all the participants, you may press star and one to ask the question. Next question is from line of [Daval] from DSP Mutual Fund. Please go ahead.
Yeah. Hi. Thanks. Congratulations on the transaction. I just had one question relating to the opportunities in the group business, Bajaj Group business. Anything that you can talk about which is an incremental opportunity from where we begin? I remember historically, this is a part of the business where generally, Allianz was not or less comfortable, so to speak. Any thoughts around that? If I get the synergy benefit right, incrementally, it's going to be a pension business, opportunities of NRI business. These are incremental opportunities. Any other comments put in?
Yeah. Related to the stakeholding, obviously, offers an opportunity in terms of strategic alliances or whatever that will emerge. Within the group, I don't think I don't know where you heard, but Allianz was never uncomfortable with the kind of business. Whatever business we do in the group, predominantly Bajaj Finance, will continue as it is. Those are between the two companies to discuss. Yeah. They were anyway open architecture. As the bank accountants opened up into open architecture, Bajaj Finance has always been focused more on its customers and the kind of solution they need. We do get a fair share of the business. We have never believed in ensuring a certain percentage of the business to come. I think that model, in our belief, will as sooner than later get disbanded because customer choice is getting more and more important wherever we go.
We have our own marketplace, and we can see that. Regarding our health business or our marketplace business, mutual fund business, they have all their own long-term plans, and they will pursue that. In terms of the healthcare space, we now both have the TPA, the OPD, wellness, illness, as well as the insurance, including government and employer-employee and retail health insurance. We will play out the healthcare insurance and the services space as we intended to do.
Perfect. This is very useful. Thanks. You said timelines are by June 26 at the latest.
Yes. If the regulatory level has come earlier, we'll try to do it, but it may be done in two or three phases. Our expectation is, yeah, in about 12 months-15 months is our reasonable expectation.
Understood. Thank you. All the best.
Thank you very much. Ladies and gentlemen, that was the last question. Now, I'll hand the conference over to Mr. Ajit Kumar for closing comments.
Thank you to all the participants for joining the call. A special thanks to the management team of Bajaj Finserv for giving us the opportunity to host the call. Thank you. Good day, everyone.
Thank you.
Thank you.
Thank you all.
Thank you very much. On behalf of JM Financial Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.