HDFC Life Insurance gets CCI nod for acquiring Exide Life Insurance

The acquisition is seen as a landmark transaction in the Indian life insurance space.

Competition Commission of India (CCI) approved HDFC Life Insurance's acquisition of Exide Life Insurance on Monday, November 2, 2021. After completion of the share acquisition, Exide Life (which will be a wholly-owned subsidiary of HDFC Life) is proposed to be merged with HDFC Life, the regulator said in the press release.

The approval by CCI comes almost two months after the Board of HDFC Life Insurance approved the acquisition of 100% share capital of Exide Life Insurance Company. The proposed acquisition is for a total consideration of Rs 6687 crore of which Rs 726 crore will be payable in cash and the balance by way of issue of 8,70,22,222 equity shares of the company at Rs 685 per share to Exide Industries Limited (holding company of the Target). The proposed issue will be by way of a preferential allotment basis.

The scheme is expected to accelerate the growth of the Agency business of HDFC Life. Exide Life complements HDFC Life’s geographical presence and has a strong foothold in South India, especially in Tier 2 and 3 towns, thus providing access to a wider market. It is also expected to add 40% to the HDFC Life Agency by adding 36700 plus agents base as of June 30, 2021.

The acquisition will augment the existing embedded value of HDFC Life by approximately 10%. The embedded value of Exide Life, as of June 30, 2021, is Rs 2,711 crore and has been reviewed by Willis Towers Watson Actuarial Advisory LLP, said the acquirer in its exchange filing. The combined embedded value of the Merged Entity will be Rs 30,042 crore (as of June 30, 2021).

HDFC Life is a leading long-term life insurance solutions provider in India, offering a range of individual and group insurance solutions that meet various customer needs such as Protection, Pension, Savings, Investment and Health. It commands a private market share of 15.5% for the weighted received premium, while Exide Life Insurance Ltd, an unlisted entity enjoys a market share of 1.3%.

The shares of HDFC Life Insurance is trading at Rs 691.45 with a loss of 0.22% today at 11.53 am.