Mumbai: Private life insurer HDFC Life Insurance on Friday said it will fully acquire Exide Life Insurance for Rs 6,687 crore. Of this, Rs 726 crore will be payable in cash and the balance will be paid in stock. As many as 8.7 crore shares of HDFC Life will be issued, at Rs 685 per share, to Exide Industries Ltd, the holding company of Exide Life.
Once the share issue happens, Exide Industries will be on-boarded as a shareholder in HDFC Life and will end up having a 4.1 per cent stake in the merged entity. And the existing shareholders of HDFC Life will dilute 4.1 per cent stake consequently. HDFC Limited’s stake will go down from the current 49.9 per cent to 47.9 per cent. As part of the deal, HDFC Life is allowed to use the Exide Brand for two years.
Exide Life Insurance Company Limited, a 100 per cent owned subsidiary of Exide Industries Limited has 36,700 agents and has presence across the country through a wide 200+ branch network, a customer base of 11.9 lakh and assets over Rs 18,781 crore as on June 30, 2021. During the financial year 2020-21, the company had total premium income of over Rs 3,325 crore. However, despite 20 years of operations Exide Life has found difficult to scale up and it still holds a mere 1.3 per cent market share in individual business.
The merged entity will have 1.44 lakh agents, an embedded value of Rs 30,042 crore, assets under management of Rs 2 lakh crore, and a total premium of Rs 41,908 crore.
After the acquisition is completed, HDFC Life would be looking for more such acquisitions, Vibha Padalkar, MD & CEO of HDFC Life told reporters in a conference call.
“Absolutely, once this transaction is consummated, we would continue to scout for more opportunities as we were,” she said.
The acquisition at 2.5 times the embedded value (of Exide Life) is still 30-35 per cent cheaper than what other listed life insurers are trading at, Padalkar said.
The transaction will accelerate the growth of the agency business of HDFC Life as well as strengthen other distribution channels including broker, direct and co-operative banks. Exide Life complements HDFC Life’s geographical presence and has a strong foothold in south India, HDFC Life said.