HDFC to acquire 51.2% stake in Apollo Munich for Rs1,347 crore
19 June 2019
HDFC Ltd will buy a 51.2 per cent stake in Apollo Munich Health Insurance, the company stated in a filing with the Bombay Stock Exchange (BSE) today.
HDFC will acquire 50.8 per cent in Apollo Munich for Rs1,336 crore from Apollo Hospitals Group and 0.4 per cent from a few employees for Rs10.84 crore, the company said in its filing.
Apollo Munich, India’s second-largest health insurance provider, is a joint venture which is 51:49 per cent owned by Chennai-based Apollo Hospitals and the remaining by German reinsurance company Munich Re.
Pratap Reddy and his family, the founders of Apollo Hospitals Enterprise Ltd, were looking to sell their stake in the venture to repay debt, Mint reported in February.
"Post-acquisition of the shares by HDFC, Apollo Munich shall be merged with its general insurance subsidiary, HDFC ERGO General Insurance Co Ltd (HDFC ERGO), subject to all regulatory, shareholders and other approvals. To support the transaction with its material benefits for Apollo Munich, Munich Health will pay Rs294 crore to Apollo Hospitals Enterprise Ltd and Apollo Energy Ltd in connection with the termination of their joint venture," HDFC said in its regulatory filing.
HDFC will buy 50.8 per cent stake in Apollo Munich Health Insurance for Rs1,336 crore from Apollo Hospitals Group and 0.4 per cent stake held by a few employees for Rs10.84 crore.
Deepak Parekh, chairman of HDFC and HDFC ERGO General Insurance said, “Health insurance penetration in India is still at a very nascent stage compared to the global average, but is expected to drive growth of the general insurance industry in the times to come. This transaction will strengthen the HDFC group’s commitment to the growing health insurance segment. The combined expertise of HDFC ERGO and Apollo Munich will result in greater product innovation, wider distribution and enhanced servicing capabilities, benefiting their 1.2 crore policyholders.”
The merged insurance entity on a pro-forma basis has a combined market share of 6.4 per cent of non-life insurance industry, with 308 branches across the country. This also makes the combined entity the second largest private insurer in the accident and health segment with a market share of 8.2 per cent.