HDFC to acquire 51 per cent in Apollo Munich

Mumbai: Mortgage lender Housing Development Finance Corporation (HDFC) on Thursday announced acquisition of majority stake in standalone health insurer Apollo Munich Health Insurance from Apollo Hospital Group for Rs 1,347-crore. The housing finance major plans to merge the health insurer with its general insurance subsidiary, HDFC Ergo General Insurance.

In the first step, HDFC will acquire 50.8 per cent stake in Apollo Munich Health Insurance for Rs 1,336 crore from Apollo Hospitals Group and 0.4 per cent stake held by a few employees for Rs 10.84 crore. This transaction, subject to regulatory approval from the National Housing Bank, insurance regulator and the Competition Commission of India, would be completed in four months, said an HDFC statement.

Post-acquisition of the shares, Apollo Munich Health Insurance will be merged with HDFC ERGO General Insurance Company. The merger is subject to regulatory approvals and is likely to take nine months to get completed.

The merged general insurance entity will have a gross premium of Rs 10,807 crore and a market share of 6.4 per cent in the country's non-life insurance market with 308 branches across the country. The acquisition of Apollo Munich will also make HDFC ERGO the second largest private insurer in both accident & health and health insurance. The combined market share will be 8.2 per cent in accident & health and 7.2 per cent in health insurance.

To support the transaction, Munich Health will pay Rs 294 crore to Apollo Hospitals Enterprise Ltd and Apollo Energy Ltd in connection with the termination of their joint venture, said a press statement from HDFC.

This marks the third health insurance deal in the market. Private equity firm True North bought Max India's controlling stake in Max Bupa Health Insurance Company in December 2018 for Rs 2,000 crore. Earlier in August of that year, Star Health and Allied Insurance Co., India's largest standalone health insurer, said private equity firms WestBridge Capital and Madison Capital and billionaire investor Rakesh Jhunjhunwala had jointly agreed to buy the firm.

Shobana Kamineni, Chairperson, Apollo Munich Health Insurance and Vice Chairperson, Apollo Hospitals Enter-prise Limited, said, "The funds from the divestment will enable us to focus on investing and growing our core healthcare business.”

Deepak Parekh, Chairman of HDFC Ltd and HDFC ERGO General Insurance Ltd, said, "The combined expertise of HDFC ERGO and Apollo Munich will result in greater product innovation, wider distribution and enhanced servicing capabilities.”