The aggregate consideration for purchase of 3,55,67,724 shares of Rs 10 each of HDFC ERGO is Rs 1,906.43 crore i.e. Rs 536 per share.The bank said that the transaction will be carried out on an arms' length basis post receipt of requisite regulatory approvals and compliances with the conditions precedent including approval from the shareholders.
The transaction will require approval from the Insurance Regulatory and Development Authority of India. HDFC Bank will also seek approval from the Reserve Bank of India.
The proposed transaction will help align the interest of HDFC Bank and HDFC ERGO, which is thereby expected to further accelerate the profitable growth of HDFC ERGO leading to additional long-term value creation for all its shareholders, HDFC said in a separate filing.
The transaction enables the HDFC Bank to participate in the growth opportunity of HDFC ERGO and augment HDFC ERGO's growth prospects leading to long-term value creation by HDFC ERGO for its shareholders. The private lender expects the transaction to be completed by 30 September 2021
HDFC ERGO has been one of the fastest growing private General Insurers in the country, having grown its Gross Written Premium at a 35% CAGR over the last 13 years. HDFC Bank has been a distribution partner of HDFC ERGO since 2009.
HDFC ERGO is a joint venture between HDFC and ERGO Group AG, the primary insurance entity of the Munich Re Group of Germany. It has a market share of 6.2% for FY 2020-21 (in terms of gross direct premium income) in India. It offers products like motor, health, travel, home, personal accident and cyber insurance in primarily the retail space and customized products like property, marine and liability insurance in the corporate space through its network of 203 branches and a wide distribution network.
For the financial year ended on 31 March 2021, the turnover (gross written premium) and net-worth of HDFC ERGO was Rs 12,443.93 crore and Rs 2,926.86 crore respectively.
HDFC Bank is a private sector bank. As of 31 March 2021, the bank's distribution network was at 5,608 branches and 16,087 ATMs / cash deposit & withdrawal machines (CDMs) across 2,902 cities/towns.
The private lender reported 18.2% rise in net profit to Rs 8,186.51 crore in Q4 FY21 compared with Rs 6,927.69 crore in Q4 FY20. Total income of the bank rose 5.8% year-on-year (YoY) to Rs 38,017.50 crore during the quarter.
Shares of HDFC Bank rose 0.95% to Rs 1,479.85 on BSE.
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