HDFC acquires 36 lakh additional shares of HDFC Ergo to take overall stake to 50.5%

HDFC has on Friday said it has acquired 36 lakh additional shares of HDFC ERGO General Insurance Company Ltd (HDFC Ergo) taking the overall stake to 50.5 per cent. This acquisition is part of the the merger deal between HDFC Ltd and HDFC Bank, which will be effective from July 1.

“Under the said letter, RBI had inter alia permitted the transfer, in terms of the Scheme, of shareholding of the Corporation HDFC Ergo, to HDFC Bank and advised that the Corporation or HDFC Bank should increase the shareholding in HDFC Ergo to more than 50 per cent prior to the effective date of the Scheme,” HDFC said in a regulatory filing.

"We wish to inform you that the Corporation has today acquired 36,42,290 equity shares of HDFC Ergo representing 0.5097% of its total issued and paid-up share capital from ERGO International AG, the other promoter of HDFC Ergo. Post the said acquisition, the corporation holds 50.50 per cent of the total paid-up share capital of HDFC Ergo. Accordingly, HDFC Ergo has become a subsidiary of the Corporation," the filing further stated.

Last week, the Competition Commission of India (CCI) approved the proposed acquisition of an additional stake by the Housing Development Finance Corporation (HDFC) in HDFC Ergo General Insurance. 
In April, the Reserve Bank of India had given its go-ahead for the same to HDFC and HDFC Bank.

“The proposed combination pertains to the acquisition by HDFC Limited of certain additional shareholding of HDFC ERGO on a spot delivery basis (the Proposed Transaction) such that HDFC Limited (after the Proposed Transaction) and the surviving amalgamated entity i.e. HDFC Bank Limited (HDFC Bank) (after the effective date of the proposed amalgamation of, inter alia, HDFC Limited into HDFC Bank) will hold over 50 per cent of the shareholding of HDFC ERGO in compliance with Indian banking laws," CCI said in a statement.

HDFC ERGO is registered with the Insurance Regulatory and Development Authority of India (IRDAI) for providing general insurance (i.e. non-life insurance) products in India.

The insurance company offers a complete range of general insurance products including motor, health, travel, home and cyber insurance in the retail space and customised products like property, rural, marine, trade credit, liability and other specialised insurance in the corporate space.

In April, the Reserve Bank of India had given its go-ahead for the same to HDFC and HDFC Bank.

"Either HDFC or HDFC Bank can increase their stake above 50 per cent in HDFC Ergo before the effective date of the merger," HDFC Bank CFO Srinivasan Vaidyanathan had said last week.

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