The Board of Directors of Housing Development Finance Corporation Ltd (the Corporation) has approved sale of 3,55,67,724 equity shares of 10 each, representing 4.99% of the outstanding issued and paid-up share capital of HDFC ERGO, to HDFC Bank Limited (a related party) at a price determined based on an independent valuation report, subject to receipt of necessary approvals including from the concerned regulators and the shareholders of the Corporation.
Since the acquirer of the shares i.e. HDFC Bank Limited is a related party of the Corporation, the said transaction would be a related party transaction. The said transactions will be carried out on an arms' length basis post receipt of requisite approval including from the shareholders. The Corporation's entire shareholding is held by public shareholders and the Corporation does not have any promoter shareholders.
HDFC Bank has been a long term distribution partner of HDFC ERGO, sharing a successful relationship since 2009. The proposed transaction will help align the interest of HDFC Bank and HDFC ERGO, which is thereby expected to further accelerate the profitable growth of HDFC ERGO leading to additional long-term value creation for all its shareholders.
The transaction will require approval from the Insurance Regulatory and Development Authority of India (IRDAI). HDFC Bank will also be seeking approval from the Reserve Bank of India (RBI). Any other necessary regulatory/governmental approvals will be evaluated prior to the share purchase agreement for the transaction and will be applied for as required.
The aggregate consideration for sale of 3,55,67,724 equity shares of 10 each is Rs. 1,906.43 crore i.e. 536 per equity share.
HDFC ERGO is a joint venture between the Corporation and ERGO Group AG, the primary insurance entity of the Munich Re Group of Germany. HDFC ERGO has a market share of 6.2% for FY 2020-21 (in terms of Gross Direct Premium income) in India, and offers products like Motor, Health, Travel, Home, Personal Accident and Cyber Insurance primarily in the retail space and customized products like Property, Marine and Liability Insurance in the corporate space through its network of 203 branches and a wide distribution network.
For the financial year ended on March 31, 2021, the total turnover (Gross Written Premium) of HDFC ERGO was 12,443.93 crore and the net-worth as at that date was 2,926.86 crore.
Shares of HOUSING DEVELOPMENT FINANCE CORP.LTD. was last trading in BSE at Rs.2487.65 as compared to the previous close of Rs. 2487. The total number of shares traded during the day was 54432 in over 4963 trades.
The stock hit an intraday high of Rs. 2515.05 and intraday low of 2453.45. The net turnover during the day was Rs. 134775921.