By AltG Research On Behalf of Poornima Vardhan and Taponeel Mukherjee
Benchmark Deal: Samara Capital has valued Aditya Birla Insurance Brokers (ABIBL) at ~4.5X EBITDA. This deal sets a benchmark for follow-on deals in the sector. It also highlights the opportunity to create massive returns in the Indian Insurance Brokerage Industry.
How can Samara Capital generate returns?
Roll-Ups are the path to creating massive returns in this sector to create significant value in the Indian Insurance Brokerage industry. Essentially, aggregate and roll-up smaller brokerages into a single platform, buying each asset at 3.5-4.5 X EBITDA. The Roll-Up platform will also benefit from cost-cutting by centralising backend operations for all the businesses acquired, better capital allocation, and efficient financing - Similar to the MSO model in the US.
Liquid Secondary Market Helps - Platforms that can aggregate and grow Insurance Brokerage platforms will get access to a liquid secondary market from larger private equity funds and strategic buyers looking to tap into India's high-growth insurance brokerage market.
With India's growing working population and the large mortality protection gap, the trends favour the Indian Insurance Brokerage industry, offering massive potential and growth opportunities.