Momentum Considers IPO Partnership With Indian Billionaire Birla

Momentum Group Ltd. is open to considering an initial public offering for its Indian venture with billionaire Kumar Mangalam Birla as the South African insurer steps up its expansion plans in Asia’s third-largest economy.

The Pretoria-based company, which has 3 billion rand ($172 million) in excess capital on its books, plans to spend a third of the amount to expand its businesses in South Africa and add new services in India, Momentum Chief Executive Officer Jeanette Marais said. Momentum controls about 44% of Aditya Birla Health Insurance Co.

“We would rather spend our money in high growth markets, and that for us at the moment is the Indian market,” Marais said in an interview. The South Asian nation has “massive potential.”

Financial firms from across the world are rushing to boost their business in the world’s fastest-growing major economy. BlackRock Inc., which returned to India by partnering with billionaire Mukesh Ambani, expects the nation’s nearly $900 billion local mutual fund industry to expand as much as threefold over the next seven years as Indians switch from gold and property to financial assets.

Momentum’s homegrown rival, Sanlam Ltd., is also expanding in the South Asian nation, which is forecast to expand 6.2% this year, according to the International Monetary Fund. That compares with 1% growth in South Africa making it the slowest on the continent after South Sudan, Equatorial Guinea and Botswana.

The company’s shares rose as much as 3.2% in Johannesburg as of 2:36 p.m. before paring the gains.As it scales up in India, Momentum has pared back its African businesses in recent years — exiting Nigeria and Kenya, and Ghana. It now operates in Mozambique, Namibia, Botswana and Lesotho.Aditya Birla Health has reached break-even after its normalized headline earnings jumped 76% in the year to June. Aditya Birla Capital Ltd. owns about 46% of the unit.

“If the market is right, you can actually extract amazing value if you go for an IPO in a country like that,” Marais said. “So all of those things are possibilities for the future, but we want to do them when the time is right, when the market is right for us.”

Momentum earlier on Wednesday said that its headline earnings climbed 55% to a record 5.98 billion rand. Its normalized headline earnings climbed 41% in the year to 6.3 billion rand, putting the insurer on track to meet its 2027 target of 7 billion rand.

The company’s unit, Guardrisk, also plans to enter India, Marais said. Guardrisk provides alternative risk financing and insurance solutions.

“We have one or two other ideas that we are starting to develop in the Indian market,” Marais said.