HDFC Life Insurance Company has announced the acquisition of 100% stake in Exide Life Insurance Company from Exide Industries in a ₹6,687 crore deal. The deal includes issuance of 8,70,22,222 shares at an issue price of ₹685 per share and a cash payout of ₹726 crore.
Post completion of the deal, Exide Industries, the parent of Exide Life, will hold 4.1% stake in HDFC Life.
The boards of HDFC Life, Exide Industries and Exide Life Insurance, in their respective meetings held on Friday, approved the sale transaction.
HDFC Life executives said the transaction would happen in two stages. In the first stage, Exide Life Insurance would become a subsidiary of HDFC Life in four months after which it would be merged with HDFC Life through the NCLT process, which should get completed towards the end of 2022.
Deepak S. Parekh, chairman, HDFC Life said, “This is a landmark transaction, the 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.”
Vibha Padalkar, MD & CEO, HDFC Life said, “We believe that this 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.”
HDFC Life executives said the proposed transaction would accelerate the growth of agency business of HDFC Life as well as strengthen other distribution channels including broker, direct and cooperative banks.
The complementary geographical presence with a strong foothold in South India, especially in Tier 2 and Tier 3 locations of Exide Life, would also help, they said.
Customers would benefit from stronger product suite, wider distribution network and more service touch points, and the synergies would enhance shareholder value, they added.
“Further, a good quality, predominantly traditional and protection focussed 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,” HDFC Life said in a filing.
Rajan B. Raheja, vice-chairman, Exide Industries, and Chairman, Exide Life said, “The focus of Exide Industries has always been to enhance the value for its stakeholders. The proposed transaction is another step taken by Exide to meet above-stated objective.”
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