HDFC Financial institution on Saturday mentioned its board has given its approval to purchase greater than 3.55 crore shares in group agency HDFC ERGO Common Insurance coverage Firm for over Rs 1,906 crore from the mum or dad firm Housing Improvement Finance Company (HDFC).
“The board of administrators of HDFC Financial institution at its assembly held on June 18, 2021 has accepted the acquisition of three,55,67,724 fairness shares of Rs 10 every, representing 4.99 per cent of the excellent issued and paid-up capital of HDFC ERGO Common Insurance coverage Firm Ltd from HDFC Ltd,” HDFC Financial institution mentioned within the submitting.
HDFC is the promoter and associated celebration of the financial institution.
The acquisition is to occur at a value decided on an unbiased analysis report, topic to receipt of vital approvals together with regulatory approvals and approval from shareholders of the financial institution, it mentioned.
“The mixture consideration for buy of three,55,67,724 shares of HDFC ERGO is Rs 1,906.43 crore, i.e. Rs 536 per share,” it mentioned additional.
HDFC ERGO Common Insurance coverage had a gross written premium of Rs 12,444 crore for the 12 months ended March 2021. The corporate’s internet price stood at Rs 2,927 crore.
The personal sector normal insurer is likely one of the quickest rising corporations among the many friends with its gross written premium rising at a 35 per cent compounded annual progress charge (CAGR) during the last 13 years.
“The proposed transaction allows the financial institution to take part within the progress alternative of HDFC ERGO and increase HDFC ERGO’s progress prospects resulting in long-term worth creation by HDFC ERGO to its shareholders,” it mentioned.
The financial institution has been a distribution associate of the insurer since 2009.
The transaction, indicative to be closed by September this 12 months, would require approval from insurance coverage sector regulator Irdai and banking regulator RBI. Some other vital regulatory or authorities approval might be evaluated previous to the share buy settlement, HDFC Financial institution mentioned.
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