The Board of Directors of HDFC Life Insurance Company Limited (HDFC Life), Exide Industries Limited (Exide Industries) and Exide Life Insurance Company Limited (Exide Life), at their respective meetings held today, authorized the transaction involving the sale of Exide Life Insurance to HDFC Life.
HDFC Life will obtain one hundred% stake in Exide Life Insurance from Exide Industries by means of issuance of 8,70,22,222 shares at an concern cost of Rs. 685 per share and a money payout of Rs. 726 crore aggregating to Rs. 6,687 crore, an official statement stated.
The method for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition. The whole method, like the acquisition and subsequent merger, is topic to getting the relevant regulatory and other approvals.
Will clients advantage?
The insurers stated in the statement that the proposed transaction will give clients access to a wider bouquet of goods and service touch-points.
Employees and agents will advantage from a bigger, stronger organisation that realises the synergies arising out of complementary enterprise models constructed on related ethos.
The proposed transaction will accelerate the development of the Agency enterprise of HDFC Life. Exide Life complements HDFC Life’s geographical presence and has a sturdy foothold in South India, particularly in Tier 2 and 3 towns, offering access to a wider market place.
Further, a great good quality, predominantly standard and protection focussed enterprise, will augment the current embedded worth of HDFC Life by around 10%.
The embedded worth of Exide Life, as on 30th June 2021, is Rs. 2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP. HDFC Life’sscale, market place-major digital and item innovation capabilities and prudent threat management tactic will help in optimizing price and more than time, accomplish larger margins for the acquired enterprise.
The closure of the proposed transaction will inter alia be topic to approval by relevant regulators like 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.
Who stated what
Commenting on the proposed transaction, Deepak S. Parekh, Chairman, HDFC Life stated, “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.”
Vibha Padalkar, MD & CEO, HDFC Life stated, “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.”
Rajan B Raheja, Vice Chairman, Exide Industries Limited and Chairman, Exide Life Insurance Company Limited stated, “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. It is likely to be a win-win situation for all stakeholders, since our subsidiary, Exide Life Insurance is going into the hands of HDFC Life Insurance, which has an established track record of value creation.”
Kshitij Jain, MD & CEO, Exide Life Insurance Company Limited stated, “This transaction is testimony to the reputation that Exide Life insurance has built of being a well-managed company. We look forward to working closely with the HDFC life team on the proposed transaction. Being part of one of India’s most respected life insurance companies will certainly benefit our customers, employees, agents and partners.”