Largest private insurer HDFC Life acquires 100% stake in Exide Life Rs 6,687 cr in part cash & stock deal. The 100% acquisition of Exide Life will be through the issuance of 8.7 crore shares at an issue price of Rs 685 per share and a cash pay-out of Rs 726cr. Post-acquisition Exide Life to hold a 4.1% stake in HDFC Life.

The transaction is subject to IRDA approval and is expected to be completed by 30th June 2022. Vibha Padalkar, MD & CEO, HDFC Life Insurance joins ET NOW exclusive to help us understand the key rationale and synergies behind this acquisition.

“This deal is first of a kind in the Life Insurance space which has not seen M&A so far. The core rationale of this deal is to grow our proprietary channel further” says Vibha Padalkar. The acquisition to accelerate proprietary channel growth, Exide Life to add ~40% to topline of HDFC Life Agency Business.

Exide Life has a strong foothold in South India especially tier2-3 cities will further strengthen HDFC Life’s presence and prove wider market access. Furthermore, throwing some light on the company’s solvency ratio management believes a cash payout of Rs 726 cr will reduce the solvency by ~ 15% and bring it down to 180% from 203% on a standalone basis.

Overall, management expects no material impact as the solvency ratio will continue to fall between the targeted range of 180-200%. The Enterprise Value is expected to cross Rs 30,000 crore mark. Management expects AUM to rise by 10% coupled with 9% increase in total premiums.

Going forward, HDFC Life will continue to explore organic and inorganic growth opportunities. “We will continue to scout for fresh opportunities, we have a balance sheet, the currency, the appetite to look for fresh opportunities once this deal is over,” says Vibha Padalkar.