Housing Development Finance Corporation (HDFC) said that its board has approved the sale of a 4.99% stake for INR 10 per share or INR 1,906 crore ($260m) in HDFC ERGO General Insurance Company to HDFC Bank Limited in a related party transaction.
The housing finance company said that the acquisition of 3.56 crore shares will be executed on an arms’ length basis after receiving the requisite approval including from the shareholders.
HDFC ERGO is a joint venture between HDFC and Germany-based Munich Re-owned ERGO Group.
The general insurer offers motor, health, personal accident, home, travel, and cyber insurance mainly in the retail space, and customized products such as property, liability, and marine insurance in the corporate space via a network of 203 branches and a broad distribution network.
HDFC Bank has been a distribution partner of HDFC ERGO since 2009. The proposed deal will help align the interest of both HDFC Bank and HDFC ERGO, and is expected to further expedite the latter’s profitable growth, resulting in additional long-term value creation for all its shareholders.
The deal, which is expected to be closed by September-end, will be subject to approval from the Insurance Regulatory and Development Authority of India (IRDAI). HDFC Bank will also be pursuing approval from the Reserve Bank of India (RBI).
HDFC to sell 5% stake in HDFC ERGO to HDFC Bank for $260m added by Pallavi Madhiraju on
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