ICICI Lombard General Insurance will acquire Bharti Enterprises-promoted Bharti AXA General Insurance through a share swap deal. Bharti Enterprises currently owns a 51 per cent stake in Bharti AXA General Insurance, while French insurer AXA holds 49 per cent.
The board of ICICI Lombard General Insurance "at its meeting held on August 21, 2020, considered and approved a 'scheme of arrangement' amongst Bharti AXA General Insurance (demerged company) and former company and their respective shareholders and creditors," the ICICI Bank promoted non-life insurer said in a late-night filing on Friday.
The shareholders of Bharti AXA will receive 2 shares of ICICI Lombard for every 115 shares of Bharti AXA held by them as on the date on which the ''scheme of arrangement'' is approved by the two insurance firms.
According to ICICI Lombard, the combined entity will have a market share of about 8.7 per cent on Pro-forma basis. The companies, however, did not disclose the deal value.
"The proposed transaction provides a meaningful opportunity for ICICI Lombard to consolidate its market-leading position in the non-life insurance sector, becoming the third-largest non-life insurer," the statement said.
The board of ICICI Lombard General Insurance added in the filing that the proposed scheme of demerger is subject to all applicable statutory and regulatory approvals, including from Insurance Regulatory and Development Authority (IRDAI), Competition Commission of India (CCI), stock exchanges, SEBI, shareholders, and creditors of the companies involved in the scheme and the relevant jurisdictional benches of the National Company Law Tribunal (NCLT).
Bharti Enterprises has been trying for a long time to exit its financial services business. In 2016, the company's talks with Reliance Industries to sell its 74 per cent stake in Bharti AXA Life Insurance and Bharti AXA General Insurance could not reach a logical conclusion.
For the fiscal year ended March 2020, Bharti AXA General Insurance reported a 38 per cent increase in its gross premium collection to Rs 3,157 crore as against Rs 2,285 crore in 2018-19.