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HDFC Life to acquire 100% stake in Exide Life for $915 mn
Photo Credit: VCCircle

Homegrown insurer HDFC Life Insurance Co. Ltd., said on Friday it will acquire a 100% stake in Exide Life Insurance--the insurance unit of battery maker Exide Industries Ltd.--for Rs 6,687 crore, according to a regulatory filing on BSE.

The deal is expected to "enhance insurance penetration and further our purpose of providing financial protection to a wider customer base",  HDFC Life chairman Deepak Parekh said in a statement.

Of the total consideration, “Rs 725.98 crore will be payable in cash and the balance by way of issue of 8.7 crore shares at an issue price of Rs 685 per share to Exide Industries amounting to approximately Rs 5,961 crore," HDFC Life said in the filing.

The board of directors of HDFC Life Insurance Company (HDFC Life), Exide Industries Ltd (Exide Industries) and Exide Life Insurance Company Ltd (Exide Life) approved the transaction involving the sale of Exide Life Insurance to HDFC Life, the statement said.

The acquisition, expected to be completed before June end 2022, is subject to regulatory and other approvals. The process for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition, the insurer said.

Bengaluru-based Exide Life manages a customer base of over 11.9 lakh and assets over Rs 18,781 crore as on June 30, 2021. 

The company has strong presence in south India, especially in tier 2 and 3 towns that will help complement HDFC Life’s geographical presence, and will provide access to a wider market.

For FY21, Exide Life had reported a turnover (total premium) at Rs 3,325 crore as compared with Rs 3,220 crore in FY20 and Rs 2,886 crore in FY19.  

The deal, which comes at a time when India’s largest and state-owned insurer Life Insurance Corporation of India (LIC) is gearing up for an initial public offering (IPO), is expected to add around 40% to the topline of HDFC Life Agency, the company said.

Currently, HDFC Life is the largest private insurance company by market capitalisation. While promoter HDFC (Housing Development and Finance Corporation) owns 49.95% in HDFC Life, its British joint venture partner Standard Life has been trimming its stake to help the Indian insurer meet the minimum public shareholding norms of the Securities and Exchange Board of India (SEBI) for listed companies.

In 2019, Standard Life, the UK-based investment manager, on Wednesday sold shares worth Rs 3,225.49 crore ($452 million at current exchange rates) in HDFC Life.

As on June end 2021, Standard Life held 3.89% ownership in HDFC Life.

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