HDFC Life Acquires Exide Life Insurance for Rs.6,687 cr

HDFC Life Insurance announced the purchase of the life insurance unit of Exide Industries for a consideration of Rs.6,687 crore or nearly $916 million. The consolidation in the life insurance sector has just started picking up as the large private players look to consolidate their market share through rapid inorganic growth. The idea is to tap an ever-growing insurance market. Life insurance penetration in India is very low at 2.82%.

HDFC Life has already emerged as the largest private sector insurer in India followed by SBI Life and ICICI Prudential Life in that order. This acquisition will help them consolidated their position. The planned acquisition of Max Life by HDFC Life had to be called due to regulatory approval reasons. This gives the added ammunition to HDFC Life to take on the competition from LIC, as the PSU insurance giant plans India’s biggest IPO in history.

As part of the deal, HDFC Life will issue 870.22 lakh shares to Exide at a price of Rs.685 per share. In addition, it will also pay a cash consideration of Rs.726 crore taking the total consideration for the acquisition to Rs.6,687 crore. While the board of directors of HDFC Life, Exide Life and Exide Industries have approved the deal, the final approval from IRDAI and other regulatory approvals are still pending.

Exide Life gives lateral value addition to HDFC Life as it brings 12 lakh customer base plus assets under management of Rs.18,781 crore. For the financial year FY21, Exide Life had total premium income of Rs.3,325 crore. Once the transaction is completed, Exide Life will be fully merged into HDFC Life.

For HDFC Life, it looks like a synergistic deal as it expands their presence in South India. Even for Exide Industries, it looks like good deal. Exide has invested Rs.1,680 crore so far in Exide Life and they are getting good value for that investment. This also allows Exide to focus on its core business of batteries.
 

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