finance news

HDFC Life to buy life insurance unit of Exide Industries for $915 Mn

HDFC Life to buy life insurance unit of Exide Industries for $915 Mn
HDFC Life to buy life insurance unit of Exide Industries for $915 Mn

HDFC Life Insurance, a long-term life insurance provider, has recently announced plans to buy the life insurance unit of Exide Industries, a storage battery manufacturer, for $915 million (₹66.87 billion). This unit acquisition deal has been entered with an objective to expand its customer base in South India, a largely untapped market.

The recent agreement will help HDFC Life Insurance, India’s largest private-sector insurer, strengthen its footprint in the region. According to an insurance regulator’s data, the life insurance penetration in the country stood at 2.82% in 2019.

Following the announcement of the deal, Exide Industries' shares increased by 10%, while the shares of HDFC Life Insurance fell as much as 4.2%. As a part of the agreement, the insurer will reportedly issue 87 million shares to the battery manufacturer at $9.38 (₹685) per share and pay $99.3 million (₹7.26 billion) in cash.

As of 30th June 2021, Exide Life had over 1.2 million customers and more than $2.5 billion (₹187.81 billion) in assets. The lead-acid storage batteries manufacturer, the largest in India with a premium income of nearly $455.12 million (₹33.25 billion) in total for the fiscal year 2020-2021, will also merge with the insurer once the deal is closed. For the record, the manufacturer has made a total investment of $229.9 million (₹16.8 billion) in its life insurance business.

Deepak Parekh, Chairman of HDFC Life, has reportedly cited that the latest deal is expected to boost insurance penetration and further expand its offerings for the enhanced financial protection of its wide customer base.

The acquisition agreement comes at a time when India is gearing up for the IPO (initial public offering) of Life Insurance Corp., a state-owned insurer. This listing is set to become the largest IPO in India, with the government planning to raise $11 billion-$12.2 billion (₹800 billion-₹900 billion) from the stake sale.

Source credit:

https://www.reuters.com/world/india/indias-hdfc-life-insurance-buy-exide-life-915-mln-2021-09-03/

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