Insurance giant Sanlam has become the second major South African company to invest in India.

The company announced here Friday that it had entered into a joint venture with India's Shriram Group to form the Shriram Life Insurance Company Limited based in that country.

Sanlam will hold a 26 percent share of the company. Final regulatory approvals are awaited in India, and it is expected that operations will commence in August.

Two years ago, South Africa's oldest insurance company Old Mutual entered a joint venture with Kotak Mahindra to form the first South Africa-India alliance in this field.

Sanlam group chief executive Johan van Zyl said the deal with Shriram was in line with Sanlam's strategy for developing its international business.

"As we outlined in our 2004 annual report to shareholders, we will consider selective international opportunities with the potential to enhance profitability on a sustainable basis," he said.

The joint venture follows Sanlam's earlier international expansion with the acquisition of Britain's Merchant Investors Assurance in 2003.

The Shriram Life Insurance Company will develop, sell and administer long-term insurance products and supporting asset management services in the Indian market.

Sanlam said in a statement it would provide product development, administration and sales training skills while the Shriram Group would provide a leading brand, a strong track record in marketing financial products and an extensive distribution network.

"Both Sanlam and the Shriram Group believe the insurance market in India has significant growth potential. The penetration of life insurance in India is extremely low as compared to other developing countries, with over 80 percent of the insurable population not being covered," the statement said.

Lize Lambrechts, CEO of Sanlam Life, said: "Sanlam and Shriram complement each other and this joint venture forms part of Sanlam's strategy to explore international opportunities that create sustainable profit growth over time."

Shriram group chairman R. Thyagarajan said: "The Shriram group has the appropriate skills and distribution infrastructure to sell insurance products.

"We plan to leverage our extensive countrywide distribution network of over 600 branches and 65,000 agents with Sanlam's experience in the life insurance sector to offer innovative products to a wide cross section of people."

The Shriram Group, established in 1974, is a major player in India's financial services sector. The group is the leader in the chit fund and truck financing businesses.

--Indo-Asian News Service