HDFC Limited announces acquisition of Apollo Hospitals Group’s shares in Apollo Munich and its subsequent merger with HDFC ERGO
- HDFC Ltd to acquire 50.8% stake in Apollo Munich Health Insurance Ltd for Rs 1,336 crore from Apollo Hospitals Group & 0.4% stake held by a few employees for a consideration of Rs. 10.84 crore
- Merger with HDFC ERGO to create a strong health insurance franchise with combined gross direct premium of Rs 10,807 crore
- Munich Health Germany will pay Rs 294 crore to Apollo Hospitals Enterprise Ltd and Apollo Energy Ltd to support the transaction
- Policy holders and channel partners to benefit from enhanced product suite, touch points and digital led service architecture
- Employees to have greater opportunities across functions and geographies
- Transaction to generate significant operating leverage and synergies
HDFC Limited (“HDFC”) and Apollo Hospitals Group (“Apollo”), at their respective meetings held today, approved entering into definitive agreements for HDFC to acquire the entire 50.8% shareholding of Apollo Group, in Apollo Munich Health Insurance Company Ltd. (“Apollo Munich”) for a consideration of Rs. 1,336 crore and 0.4% shareholding held by a few employees for a consideration of Rs. 10.84 crore, subject to regulatory approvals. Post-acquisition of the shares by HDFC, Apollo Munich shall be merged with its general insurance subsidiary, HDFC ERGO General Insurance Company Limited (“HDFC ERGO”), subject to all regulatory, shareholders & other approvals. To support the transaction with its material benefits for Apollo Munich, Munich Health will pay Rs 294 crore to Apollo Hospitals Enterprise Ltd and Apollo Energy Ltd in connection with the termination of their joint venture.
The proposed transaction brings together two large insurance players with complementary capabilities. The merged insurance entity on a pro-forma basis has a combined market share of 6.4% 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 & health segment with a market share of 8.2%. 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.
The proposed share acquisition will be subject to regulatory approvals by National Housing Bank (NHB), Insurance Regulatory and Development Authority of India (IRDAI) and Competition Commission of India (CCI). The subsequent merger of Apollo Munich with HDFC ERGO would be subject to approval of the shareholders, National Company Law Tribunal (NCLT), and final approval of IRDAI.
Commenting on the proposed transaction, Mr. Deepak Parekh, Chairman of HDFC Ltd and HDFC ERGO General Insurance said,
“Health insurance penetration in India is still at a very nascent stage compared to the global average, but is expected to drive growth of the general insurance industry in the times to come. 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.”
Ms. Shobana Kamineni, Chairperson Apollo Munich Health Insurance and Vice Chairperson Apollo Hospitals Enterprise Limited said
“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. Apollo Munich established its leadership in the industry by winning several awards with its market leading innovations and customer centric approach. We are sure that the new shareholder will continue to nurture and scale the business to greater heights and confident that all stakeholders will be positively impacted. The funds from the divestment will enable us to focus on investing and growing our core healthcare business.”
Commenting on behalf of Munich Re Group, Dr. Markus Riess Chairman ERGO Group AG Germany and Member of the Board of Munich Re said
“Over the years, Munich Re Group has enjoyed an excellent relationship with the Apollo group, in building a powerful franchise in Health insurance. With this transaction, we are very much looking forward to further strengthening our ties with HDFC Group and consolidating our presence in India”.