Munich Re ups stake in Apollo Munich Health Insurance Company
27 January 2016
German health and reinsurance company Munich Re has acquired an additional 23.3-per cent stake in Apollo Munich Health Insurance Company for Rs163.5 crore.
With the development, Munich Re's stake in Apollo Munich Health, a joint venture between Apollo Energy Company (an arm of Apollo Hospitals group) and Munich Re would rise to 48.7 per cent.
The proposal valued Apollo Munich at Rs703 crore and finalisation of the deal is expected to happen in the first quarter of 2016. Apollo Hospitals group by was advised by Axis Capital.
Munich Re's decision to raise its shareholdings follows the government's decision to increase the foreign direct investment cap in the insurance sector from 26 per cent to 49 per cent. The increase in shareholding, would see Munich Re strengthen its presence in India, one of the key markets for the company.
According to Prathap C Reddy, chairman of Apollo Munich Health Insurance Company, and chairman of Apollo Hospitals Enterprise, ''The show of confidence from our JV partner will go a long way in helping the group achieve its vision…''
Completion of the proposed transaction was subject to applicable regulatory approvals as also the execution of customary agreements, which was expected to be completed by the end of the first quarter of 2016.
After the completion of the transaction, Apollo Hospitals Group's shareholding in Apollo Munich would reduce from 74.4 per cent to 51.1 per cent. Also, Munich Re's shareholding in Apollo Munich would rise to 48.7 percent, with 0.2 per cent being held by employees.
Doris Hopke, the member of the Munich Re board of management responsible for Munich Health, said, ''India's population structure, increased life expectancy and positive economic development will usher in a steep rise in medium-term healthcare spending. Since its start in 2007, Apollo Munich Health Insurance has shown exceptional, often above-market growth rates. With the increased stakeholding, we are strengthening our position for sustainable and profitable growth in this region.''