DEG Re-Enters Pakistan Insurance Market through Stake in TPL Insurance

Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG), a wholly-owned subsidiary of KfW Group based in Cologne, Germany, has acquired a 19.9 percent equity stake in TPL Insurance.

DEG has invested Rs. 466.5 million on a fully diluted basis to acquire this share in equity.

The acquisition follows TPL Insurance’s announcement made in June 2020, through a notification submitted to the Pakistan Stock Exchange (PSX) on DEG’s interest in acquiring an equity stake in the company subject to approval from the Board of Directors, Shareholders, Securities, and Exchange Commission of Pakistan (SECP) and other regulatory bodies.

This re-entry into the Pakistani market by DEG was planned through investment in an insurance company by a Development Finance Institution in recent times in Pakistan.

With the experience and expertise of DEG as a major institutional investor, the recipient company will also greatly benefit in terms of custom-shaped solutions in all respectable areas, including but not limited to best corporate governance practices, business support, risk management, and environmental and social matters.

While this foreign collaboration will also help TPL Insurance to develop its Agriculture and Micro Insurance segments, thereby increasing penetration of insurance in Pakistan.

Commenting on the occasion, Muhammad Aminuddin, CEO of TPL Insurance, said, “I take deep pride in welcoming DEG on board at a time when the global economy is facing extremely challenging times.”

He said, “Working with the experience and expertise of DEG, one of Europe’s largest private-sector development financiers, will help us accelerate our growth and make a larger impact in developing the insurance sector in Pakistan.” Adding, “I am confident that DEG’s re-entry to the Pakistani market will provide an impetus to foreign investments in the country and boost economic growth.”

TPL Insurance is comparatively a small but growing insurer in the local market. It was established in 1992, and it continued the business of general insurances across the country. In 2014, it commenced the services of Takaful through the general window of Takaful.

Later last year, in October, it was also reported that the German company would acquire shares by way of fresh issuance of ordinary shares other than by way of the rights issue. It has already accomplished the exercises of legal and financial due diligence of TPL Insurance Limited by that time.

At TPL Insurance Limited, the management was tasked by the board for negotiation along with the finalization of deal agreements and obtaining requisite corporate and regulatory approvals.

TPL Insurance intends to further develop its digital assets and bring efficiencies through the digitization of business processes. The equity injection will also improve the financial strength and underwriting capability of TPL Insurance.

Founded in 1962, DEG is one of Europe’s largest development financial institutions for private companies. DEG’s interest in TPL Insurance is backed by their vision to support impactful investments that drive financial inclusion.

The Company’s long-term strategy is to support insurance companies in regions with low insurance penetration and promote economic growth. The development financier will appoint a member of the Board of Directors of TPL Insurance.

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