HDFC Life, the country’s largest listed private insurance company, has announced the purchase of Exide Life on Friday, 3 September. The Board of Directors of HDFC Life Insurance Company, Exide Life and Exide Industries have approved the deal in their respective meetings. Regarding the impact of this deal on the customers of both the insurance companies, it has been said that this will give more products and service touch points to the customers. After the deal, HDFC Life will become bigger and stronger, which will benefit employees and agents.
Under the deal, HDFC Life will get 100 per cent stake in Exide Life and it will be issued by Exide Industries at Rs 685 to Rs 8,70,22,222. Apart from this, HDFC Life will also make a cash payment of Rs 726 crore i.e. the total value of this deal is Rs 6687 crore. The entire process of acquisition and then merger will have to get regulatory and other approvals. The deal will require approval from insurance regulator Irda, Competition Commission (CCI), NCLT and shareholders of HDFC Life and Exide Industries.
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Growth of agency business of HDFC Life is expected to accelerate
The agency business of HDFC Life will get a boost under the proposed deal. Exide Life has a strong presence in South India, the acquisition of which will enhance HDFC Life’s presence across multiple sectors. Exide Life has a strong presence in Tier 1 and Tier 2 cities. Apart from this, the better quality, primarily traditional and protection focused business will increase the embedded value of HDFC Life by 10 percent. According to the advisory firm of HDFC Life, its embedded value as on 30 June 2021 was Rs 2711 crore.
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The deal will prove to be a value creative for all stakeholders.
HDFC Life Chairman Deepak S Parekh described the deal as a landmark in the Indian life insurance industry and said it would help bring more people under the ambit of insurance and ensure financial security to the people. According to Vibha Padalkar, MD and CEO, HDFC Life, the merger can prove to be value creative to customers, employees, shareholders and distribution partners. According to Rajan B Raheja, Chairman of Exide Life Insurance and Vice Chairman of Exide Industries, the decision has been taken to enhance the value of the stakeholders. Raheja said this will prove beneficial for all stakeholders as HDFC Life has proven its track record in value creation.