CCI Approves HDFC to Acquire Certain Stake in HDFC Life Insurance & HDFC ERGO General Insurance

CCI Approves HDFC to Acquire Certain Stake in HDFC Life Insurance & HDFC ERGO General Insurance

The Competition Commission of India (CCI) has granted its approval to mortgage lender HDFC to acquire a certain stake in HDFC Life Insurance Company and HDFC ERGO General Insurance Company Ltd.

In April, the Reserve Bank had also allowed HDFC Bank to increase its shareholding in HDFC Life Insurance Company and HDFC ERGO General Insurance Company to over 50 per cent prior to the effective date of the merger.

The CCI in a statement said it has approved the proposed combination involving acquisition of additional shareholding of HDFC Life Insurance Company Limited by Housing Development Finance Corporation Limited (HDFC).

HDFC Life Insurance Company Limited (HDFC Life / Target) is a life insurance company registered with the Insurance Regulatory and Development Authority of India. It offers a range of individual and group life insurance solutions including participating, nonparticipating and unit linked insurance policies. Its product portfolio comprises of various life insurance and investment products such as protection, pension, savings, investment and annuity.

In another statement, the competition regulator said it has cleared acquisition by HDFC of certain additional shareholding of HDFC ERGO General Insurance Company Limited.

HDFC ERGO is registered with the Insurance Regulatory and Development Authority of India for providing general insurance (i.e., non-life insurance) products in India. It offers a complete range of general insurance products including motor, health, travel, home and cyber insurance in the retail space and customized products like property, rural, marine, trade credit, liability and other specialized insurance in the corporate space.

In both these cases, the merged entity HDFC Bank (after the effective date of the proposed amalgamation) would hold over 50 per cent of the shareholding of the two insurance companies, according to CCI.

Described as one of the biggest deals in Indian corporate history, the HDFC Bank announced on April 4 last year that it had agreed to take over the biggest domestic mortgage lender in a deal estimated to be worth around USD 40 billion. This will create a financial services giant in India. The proposed entity will have a combined asset base of around Rs. 18 lakh crores.

After the deal is effective, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 percent of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold.