HDFC will acquire 50.8% shareholding of Apollo Group, in Apollo Munich Health Insurance 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.
The agreement was approved by HDFC and Apollo Hospitals Group, at their respective meetings held on Wednesday (19 June, 2019).
Post-acquisition of the shares by HDFC, Apollo Munich shall be merged with its general insurance subsidiary, 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 and Apollo Energy in connection with the termination of their joint venture.
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.
“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.” stated Deepak Parekh, Chairman of HDFC and HDFC ERGO General Insurance in a news release.
“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..The funds from the divestment will enable us to focus on investing and growing our core healthcare business.”said Shobana Kamineni, Chairperson Apollo Munich Health Insurance and Vice Chairperson Apollo Hospitals Enterprise.
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”.