HDFC on Wednesday said it has entered into agreements for acquiring up to 51.2 per cent of the equity share capital of Apollo Munich Health Insurance Company for a total consideration of Rs 1,346.84 crore.
The mortgage lender said that it will acquire Apollo Hospitals Group's entire 50.8 per cent stake in Apollo Munich Health Insurance for Rs 1,336 crore and 0.4 per cent stake held by a few employees for a consideration of Rs 10.84 crore.
Established in 2007, Apollo Munich Health Insurance is a 51:49 joint venture between Chennai-based Apollo Hospitals and German reinsurer Munich Re.
"Post-acquisition of the shares by HDFC, Apollo Munich will be merged with its general insurance subsidiary, HDFC ERGO General Insurance Company, subject to shareholders and all other regulatory approval," HDFC said in a filing to the Bombay Stock Exchange.
The merged insurance entity will have 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, the company said.
"The proposed merger is expected to result in significant benefits to policy holders and other stake holders with an enhanced product suite, touch points, technology innovation, as also via scale based synergies," it said.
To support the transaction, Munich Health will pay Rs 294 crore to Apollo Hospitals Enterprise and Apollo Energy in connection with the termination of their joint venture.
Commenting on the proposed transaction, Deepak Parekh, Chairman of HDFC Ltd and HDFC ERGO General Insurance said, "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 policy holders."
"Creating financing for illness is critical to building a healthy nation, Apollo Munich played a strategic role in building this Industry. We are glad to pass on the baton of Apollo Munich to a reputed group like HDFC," said Shobana Kamineni, Chairperson Apollo Munich Health Insurance and Vice Chairperson Apollo Hospitals Enterprise.
Apollo Hospitals will use fund proceeds to focus on investing and growing our core healthcare business, Kamineni added.
Edited by Chitranjan Kumar