The investment made by Groupama on the insurance market is thelargest on the Romanian financial market, second only to the amountpaid by Austria-based Erste for the largest bank on the Romanianmarket, BCR.
Having made this year's biggest launch on the Romanian insurancemarket - Groupama Asigurari, the French group also announced thesum invested: 600 million euros, which earned it the third positionon the market.
What would it have obtained if it had started a business fromscratch with this money?
"There is always a debate to be had when it comes to an acquisitionversus a greenfield investment (building a business from scratch).If you want to get a lot in a very short span of time, you go foran acquisition. Groupama gained precious time this way, becauseotherwise one would have to hire several hundred people, a topmanagement team, build a sales team; it's not an easy thing to do,"says Marian Tescaru, managing partner of investment bankingadvisory company Altria Capital.
Groupama, with over 16 billion euros in turnover last yearinternationally, is one of the most aggressive investors on theRomanian insurance market, having made three acquisitions: BTAsigurari, Asiban and OTP Garancia. The three companies werepurchased in less a year, from late 2007 to mid 2008, for 450million euros. The French paid 100 million euros for BT Asigurariand 350 million euros for Asiban, with the latter being arecord-high transaction on the Romanian market, considering thatAsiban was valued at double the volume of its gross premiumsunderwritten (the main indicator of the insurance market, whichpoints to the volume of business).
In the wake of the acquisitions, the French spent another 128million euros to cover losses of the three insurers. RecentlyAsiban has merged with BT Asigurari, creating a new company:Groupama Asigurari, which, by the end of the year, will absorb OTPGarancia.
"With 600 million euros, you can build a business from scratch, butit takes a long time until you build a client portfolio and a salesnetwork. I think these acquisitions primarily gained Groupamatime," says Cristian Fugaciu, general manager of insurance brokerMarsh.
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