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business | IST

Will apply to NCLT for completing merger with Exide Life: HDFC Life Insurance

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HDFC Life Insurance acquired 100 percent equity shares of Exide Life, thereby making the latter its fully owned subsidiary company. In an interview with CNBC-TV18, Niraj Shah, CFO, HDFC Life Insurance, shared that they have concluded the first steps of the transaction with Exide Life. Shah expects the merger to conclude in the second half of the current financial year after it applies to NCLT.

HDFC Life Insurance acquired 100 percent equity shares of Exide Life, thereby making the latter its fully owned subsidiary company. In an interview with CNBC-TV18, Niraj Shah, CFO, HDFC Life Insurance, shared that the company has just concluded the first steps of the transaction in acquiring Exide Life. Shah expects the merger to conclude in the second half of the current financial year after it applies to NCLT.
He said, "It's a great feeling to have the first steps of the transaction concluded at the start of the year with new approvals from the regulator for the acquisition as part of the overall merger scheme."
He added, "Now, we will work together along with the management team at Exide Life to ensure that the integration is done in a manner, which is seamless, so that the business value and all stakeholders’ interests are protected."
Shah explained, "The merger is a two-step process. The first step was for Exide Life to become a 100 percent subsidiary of HDFC Life, which is now the case starting January 1, 2022. The next step is going to be in terms of applying to the NCLT for the merger process, which will then require a final approval from our insurance regulator as well."
"We do expect that to conclude in the current financial year sometime towards maybe the second half of the financial year and that's when it becomes one entity," he said.
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On synergy benefits, Shah mentioned that Exide Life has a strong leadership position in tier-II and tier-III cities, especially in the south and east. He believes this will certainly benefit HDFC Life.
"Exide Life has been a very well-run business. It has established a strong leadership position in tier-II, tier-III markets, especially in the south and the east. It has a fantastic distribution capability led by its agency business and some fairly strong partnerships on the broking as well as on the co-operative banking side as well," he mentioned.
On digital assets, he said that those will be available for Exide Life business as well. He said, "Our digital assets will be available to the entire distribution as well as the customer base of 9 lakh plus customers that they have. So, all of these things will come to the table to start with."
On growth, he said, the company has grown at 14 percent on a 2-year compounded annual growth basis. Shah believes that the base effect is making the growth look muted on a one-year basis.
He explained, "The last year was a fairly difficult year for the industry and at an overall level, while we grew at 20 percent plus, the industry numbers were very different. The base effect looks a little different when you look at it from one year basis. So what we look at is on a two-year and three-year basis how things are looking both for us as well as for the industry."
"So if you were to look at the eight months numbers on a two year compounded annual growth rate (CAGR) basis, we have grown at 14 percent vis-à-vis 4-5 percent for the industry and about 9-10 percent for the private sector," Shah said.
For the full interview, watch the accompanying video