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HDFC’s Acquisition of Apollo Munich Health - A New Beginning for Finance & Health Sectors in India

Rashmi Ghosh Rashmi Ghosh 24 June 2019

HDFC Ltd., has acquired 51.2% stake in Apollo Hospitals Group for Rs. 1,347 crore. This is equivalent to 1.2 times of the financial mortgage company’s gross annual premium for the FY 2019.

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HDFC Ltd. has announced its acquisition of Apollo Hospitals Group by acquiring 50.8% stake for Rs. 1,336 crore. The largest mortgage financier in India has collaborated with Munich Re Group as a strategic move to make a foray into the health insurance sector in India and benefit from the capital market growth.

Apart from Rs. 1,336 crore that HDFC Ltd. will pay Apollo Hospitals as a part of the deal, it will also pay an additional Rs. 10.84 crore to the employees of Apollo Munich Health Insurance Co. Ltd. This amounts to an additional 0.4% stake in the company and takes the total deal size to Rs. 1,347 crore. This takes HDFC’s total stake in Apollo Munich Health Insurance to 51.2%, which is 1.2 times its official gross annual premium for FY 2019.

Reportedly, the first part of the two-stage transaction will comprise of HDFC acquiring 51.2% stake in Apollo Munich after receiving the necessary approvals from Insurance Regulatory and Development Authority of India (IRDAI), National Housing Bank and Competition Commission of India.

The second stage of the transaction will witness the merger of Apollo Munich with HDFC Ergo, provided it receives approval of the National Company Law Tribunal, followed by the final approval from IRDAI. This will mark the collaboration between HDFC Ergo and Apollo Munich under HDFC Ergo, with Munich holding 49% stake post the merger.

The merger between these companies will take the gross premium to Rs. 10,807 crore, recording a market share of 6.4% in the non-life insurance market in India. It will rank second in the accident and health insurance marketplace with a market share of 8.2%.

Investors and stakeholders of the insurance and health sectors in India eagerly await to see how the joint venture will shape the industries in the near future.

Please Note: Apollo Munich Health Insurance is now HDFC ERGO Health (formerly Apollo Munich Health Insurance)

Rashmi Ghosh
Written by Rashmi Ghosh
Digital enthusiast, dreamer with a colourful mind and shares her soul with canines. She survives on coffee, and food and travel feature among her topmost priorities.