HDFC Life buys Exide Life Insurancefor ₹6,687crore
HDFC Life will buy 100% stake in Exide Life via issuance of 87 million shares
NEW DELHI: Private life insurer HDFC Life Insurance Friday said it will acquire Exide Life Insurance from Exide Industries in a deal worth ₹6,687 crore.
“The board of directors of HDFC Life Insurance Company (HDFC Life), Exide Industries and Exide Life Insurance Company… approved the transaction involving the sale of Exide Life Insurance to HDFC Life,” HDFC Life said in a release.
HDFC Life will acquire 100% stake in Exide Life Insurance from Exide Industries via issuance of 87 million shares at an issue price of ₹685 per share and a cash payout of ₹726 crore aggregating to ₹6,687 crore.
The process for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition, the insurer said in the release.
The closure of the proposed transaction will be subject to approval by relevant regulators including the Insurance Regulatory and Development Authority of India (Irdai), Competition Commission of India (CCI), National Company Law Tribunal (NCLT), stock exchanges and approval by the shareholders of HDFC Life and Exide Industries.
“This is a landmark transaction, first of its kind, in the Indian life insurance space. It would enhance insurance penetration and further our purpose of providing financial protection to a wider customer base,” HDFC Life chairman Deepak Parekh said in the release.
HDFC Life managing director and chief executive Vibha Padalkar said the amalgamation can result in value creation for customers, employees, shareholders and distribution partners.
“It gives us an opportunity to realise synergies arising out of complementary business models, and further bolster our proprietary distribution network,” she said.
The proposed transaction will give customers access to a wider bouquet of products and service touch points.
Exide Life has a strong foothold in South India, especially in tier 2 and 3 towns.
The biggest insurance deal in the country will accelerate the growth of the agency business of HDFC Life. Exide Life, with a “strong” foothold in South India, especially in tier 2 and 3 towns, complements HDFC Life’s presence, and will provide access to a wider market, the statement said.
The release said a good quality, predominantly traditional and protection-focused business, will augment the existing embedded value of HDFC Life by approximately 10%.
The embedded value of Exide Life, as on June 30, 2021, is ₹2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP, it said.
India’s competitive insurance sector has seen a rise in demand for medical and life coverage after the pandemic ravaged the country. The deal could prompt further consolidation in the sector, which has about 57 insurance companies, including two dozen life insurers.
HDFC Life’s shares fell 2.2% at 9:53 a.m. while Exide Industries jumped as much as 15%, the most since 2011.