InvestorQ : Who do you think benefits from the HDFC Life acquisition of Exide Life?
Rashi Mehra made post

Who do you think benefits from the HDFC Life acquisition of Exide Life?

Archita Jajjoo answered.
8 months ago

To a large extent, both HDFC Life Insurance and Exide life will benefit from this deal. While Exide Life gets a much larger balance sheet, HDFC Life gets a much bigger network in the Southern part of India. HDFC Life has actually acquired 100% in Exide life for a cash plus stock consideration for Rs.6,687 crore.

This deal will add about 40% to HDFC Life’s agency business and nearly 30% to its overall agent base. Post this deal, the total AUM of HDFC Life will decisively cross above Rs.200,000 crore. Post this deal, Exide Industries will hold 4.1% in HDFC Life while HDFC will see it stake in HDFC Life come down.

Exide has invested nearly Rs.1,680 crore in its insurance venture till date and with this deal it gets almost 4 times return on investment. It also continues to be interested in the life insurance business in India via its 4.1% stake in HDFC Standard Life. The eventual merger will allow HDFC Life to get immediate control of Exide Life as the merger process normally takes around 18 months.

Earlier, HDFC Life had made an attempt to acquire Max life but that had not been successful. This will underline the dominant private sector insurance position of HDFC Life and also enable them to take on competition from LIC, post its much publicised IPO.