- HDFC Ltd to acquire 50.8% stake in Apollo Munich Health Insurance Ltd for Rs1,336 crore from Apollo Hospitals Group & 0.4% stake held by a few employees for a consideration of Rs10.84 crore
- Merger with HDFC ERGO to create a strong health insurance franchise with combined gross direct premium of Rs10,807 crore
- Munich Health Germany will pay Rs294 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 recently, approved entering into definitive agreements for HDFC to acquire the entire 50.8% shareholding of the Apollo Group in Apollo Munich Health Insurance Company Ltd (Apollo Munich) for a consideration of Rs1,336 crore and 0.4% shareholding held by a few employees for a consideration of Rs10.84 crore, subject to regulatory approvals. Following acquisition of the shares by HDFC, Apollo Munich shall be merged with its general insurance subsidiary, HDFC ERGO General Insurance Co. Ltd (HDFC ERGO), subject to all regulatory, shareholders’ and other approvals. To support the transaction with its material benefits for Apollo Munich, Munich Health will pay Rs294 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 the non-life insurance industry, with 308 branches countrywide. This also makes the combined entity the second-largest private insurer in the accident and health segment with a market share of 8.2%. The proposed merger is expected to result in significant benefits to policy-holders and other stakeholders with an enhanced product suite, touch points and technology innovation, as also via scale-based synergies.
The proposed share purchase will be subject to regulatory approvals by the 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 will be subject to approval of the shareholders, National Company Law Tribunal (NCLT) and final approval of IRDAI.
Commenting on the proposed transaction, Deepak Parekh, Chairman, 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 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.”
Shobana Kamineni, Chairperson, Apollo Munich Health Insurance, and Vice-Chairperson, Apollo Hospitals Enterprise Ltd, said, “Creating financing for illnesses is critical to building a healthy nation. Apollo Munich played a strategic role in building this industry. We’re glad to pass on the baton of Apollo Munich to such a reputed group as HDFC. Apollo Munich established its leadership in the industry by winning several awards with its market-leading innovations and customer-centric approach. We’re sure that the new shareholder will continue to nurture and scale the business to greater heights and confidence 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 the Munich Re Group, Dr Markus Riess, Chairman, ERGO Group AG Germany and Member of the Board of Munich Re, said, “Over the years, the Munich Re Group has enjoyed an excellent relationship with the Apollo Group in building a powerful franchise in health insurance. With this transaction, we’re very much looking forward to further strengthening our ties with the HDFC Group and consolidating our presence in India.”