Bhupinder Singh-led InCred Group is expanding its financial services portfolio by venturing into general insurance and launching a quant-driven mutual fund house, aiming to establish a diversified financial services company.
InCred Group, spearheaded by Bhupinder Singh, is embarking on a strategic expansion into the insurance and asset management sectors. The group plans to establish a general insurance joint venture with a foreign partner and introduce a mutual fund house, aiming to create a comprehensive financial services company encompassing lending, asset management, wealth management, and other segments.
In an interview with Mint, CEO Bhupinder Singh revealed that the mutual fund offering will be 'quant-driven,' employing only quantitative techniques without active management. The insurance venture will involve domestic investors to seed the business with a capital of at least ₹300 crore. InCred will hold over 51% of the general insurance business, focusing on health and motor insurance.
'We've spent about a year building the foundation, and we're aiming to launch within the next three to six months as we finetune our approach,' said Singh. InCred has identified an overseas joint venture partner, but details remain undisclosed pending finalized agreements. The foreign partner is expected to own around 24% of the entity, with domestic investors holding the remainder.
Despite the potential of the insurance segment, it has experienced significant churn. Recently, Allianz SE announced its exit from joint ventures with the Bajaj Group, seeking to increase its stake beyond 26% in general and life insurance entities. Other transactions include Bharti Axa's sale of its general insurance business to ICICI Lombard in 2020 and its agreement to acquire Axa's stake in its life insurance business in 2023.
Singh emphasized InCred's ability to differentiate its insurance offering through machine learning and artificial intelligence (ML/AI) techniques. 'We will use advanced analytics, machine learning, and AI tools to enhance our underwriting edge. We’ll initially build our B2C (business-to-consumer) and B2B2C (business-to-business-to-consumer) distribution network and may consider acquisitions down the line if a good opportunity aligns at a reasonable price,' he said.
The venture will initially be capitalized at ₹300 crore, and InCred will soon start the process of securing an Insurance Regulatory and Development Authority of India (Irdai) license, Singh added.
Singh is building out InCred at a time when entrenched players such as JM Financial, the Edelweiss Group, IIFL Finance and Avendus Capital offer many similar services. According to Singh, the three InCred units should collectively generate over $100 million in pre-tax profit in FY25. InCred does not plan to list the entities at the holding level yet, but that may be a plan for another day.
Singh hopes to build InCred like Uday Kotak did Kotak Mahindra Bank. Kotak has built a diverse platform, from retail lending to investment banking, he said. 'In the next five to ten years, when InCred is generating over $1 billion in profit, we could consider applying for a banking license. At that stage, listing all three entities together might make sense, but for now, each business offers unique value to shareholders,' Singh added.
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