Mumbai, Sept 3:
After failing to acquire Max life four years back,Mumbai based HDFC Life Insurance, the second largest private sector life insurer, has decided to take over Bengaluru Exide Life for Rs. 6,687 crore. HDFC Life will issue 8,70 crore of its shares at an issue price of Rs. 685 per share and a cash payout of Rs. 726 crore to the promoters,Rajan B Raheja owned Exide Group,of Exide Life, for the deal.
The board of Directors of HDFC Life Insurance Company (“HDFC Life”), Exide Industries Limited (“Exide Industries”) at their respective meetings held today,approved the merger of later with former.
The embedded value of Exide Life, as on 30th June 2021, at Rs. 2,711 crore will augment the existing embedded value of HDFC Life by approximately 10%, said HDFC life in a release.
Exide Life complements HDFC Life’s geographical presence and has a strong foothold in South India, especially in Tier 2 and 3 towns, thus
providing access to a wider market HDFC Life’s scale will aid in optimising cost and over time, achieve higher margins for the acquired business.
The proposed transaction will give customers access to a wider bouquet of products and service touch points. Employees and agents will benefit from a larger, stronger organisation that realises the synergies arising out of complementary business models built on similar ethos. The proposed transaction will accelerate the growth of the agency business of HDFC Life.
"There are many small players in the market, so we could see more consolidation in the sector for benefits of scale as competition increases," Kajal Gandhi, vice president at ICICI Securities, said
The process for merger of Exide Life into HDFC Life will be initiated on completion of the acquisition. The entire process, including the acquisition and subsequent merger, is subject to obtaining the relevant regulatory and other approvals.The closure of the proposed transaction will inter alia be subject to approval by relevant regulators including 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.
Commenting on the proposed transaction, Deepak S. Parekh, chairman, HDFC Life said, “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 said, “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 said, “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 said, “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.”
Transaction Advisors
AZB & Partners acted as the legal advisor to HDFC Life and Trilegal acted as the legal advisor to Exide Life and Exide Industries.
Deloitte Touche Tohmatsu India LLP and Ms. Rashmi Shah FCA (Registered Valuer) were appointed as valuers for the transaction
by HDFC Life, and Desai Haribhakti & Co, Chartered Accountants and Mr. S. Sundararaman (Registered Valuer) were appointed
as valuers by Exide Industries.
JM Financial Limited and Ambit Private Limited provided fairness opinions to the Boards of HDFC Life and Exide Industries
respectively.
Embeded value of Exide Life has been reviewed by Willis Towers Watson Actuarial Advisory LLP.
Shares of Exide Industries on Friday jumped 15 per cent after HDFC Life Insurance said it will acquire Exide Life Insurance from the company in a deal worth Rs 6,687 crore.The stock zoomed 13.85 per cent to Rs 202.95 on BSE.
On NSE, it jumped 14.98 per cent to Rs 204.90.
HDFC Life Insurance shares, however, dropped 3.98 per cent to Rs 728.55 on BSE.
HDFC Life
Established in 2000, HDFC Life as on June 30, 2021 has 37 individual and 13 group products in its portfolio, along with 7 optional rider
benefits, catering to a diverse range of customer needs.It has 390 branches and additional distribution touch-points through several new tie-ups and partnerships. The count of our partnerships is around 300, comprising traditional partners such as NBFCs, MFIs and SFBs, and including new-ecosystem partners.
Exide Life
Exide Life Insurance Company Limited, a 100% owned subsidiary of Exide Industries Limited is an established and profitable life
insurance company. It commenced operations in 2001-02 and is head quartered in Bengaluru. The company manages a customer base of 11.9+ lakhs and assets over Rs. 18,781 crores (as on June 30, 2021). During the financial year 2020-21, the company achieved total premium income of over Rs. 3,325 crore. Exide Life Insurance distributes its wide range of Insurance products through multiple channels viz. agency, bancassurance, corporate agency & broking, direct channel and online. The agency channel comprises of 36,700+ advisors and has presence spread across the country through a wide 200+ branch network.