Shares of SBI Life Insurance were deep in the red on Wednesday following reports that the firm’s talks to buy Bharti Group’s insurance business had fallen through.

What Happened: The telecom giant’s negotiations to sell its life insurance venture to SBI Life Insurance have collapsed due to valuation disagreements, Economic Times reported, citing sources. This will delay the Mittal family’s planned exit from the financial services sector but opens the door for private equity investors to potentially acquire the firm.

Bharti AXA Life, now wholly owned by Bharti Group, has been up for sale as the Mittal family aims to concentrate on its core telecom business and divest from non-core revenue streams.

The negotiations fell through due to Bharti Group’s higher asking price, which SBI Life was unwilling to meet since Bharti AXA’s business has shown a steady decline, a source told the business daily.

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Background: In 2006, Bharti and France’s AXA formed two joint ventures for insurance — one for general insurance and the other for life insurance. The partners exited the general insurance venture, selling it to ICICI Lombard. In October 2023, AXA sold its stake in the life insurance venture to Bharti Group, making it the sole owner.

Financially, Bharti AXA Life has struggled for many years, with only brief periods of profitability. The insurer reported a 23% decline in premium income to ₹780 crore in FY24, down from ₹1,016 crore in FY23. This decline contrasts with a 12% growth in the private sector and a 2% overall industry growth. Bharti AXA Life’s market share stood at 0.21% in FY24.

Price Action: SBI Life Insurance’s share price was down 2.2% at ₹1,418.90 in morning trade on Wednesday.

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