Daily News

HDFC Life to acquire Exide Life in India’s biggest insurance deal

HDFC Life Insurance, India’s largest private insurer, announced on Friday that its board of directors has authorized the acquisition of 100% of Exide Life Insurance Company’s share capital for a total payment of Rs 6,687 crore. In Friday’s early deals, HDFC Life’s stock was trading over 3% lower on the BSE, while Exide Industries’ stock was up 10%.

The life insurance company will acquire a 100 percent stake in Exide Life from Exide Industries. The agreement involves the issuance of 8,70,22,222 shares at a price of Rs. 685.5 per share and a cash distribution of Rs.726 crores, for a total of Rs. 6,687 crore. Following the completion of the acquisition, the process for merging Exide Life into HDFC Life will begin. Exide Life is a unit of battery maker Exide Industries,

The country’s largest insurance deal may inspire even more consolidation in the industry, which includes around 57 companies; including two dozen life insurers.

hdfc life to acquire exide life

What HDFC said about the acquisition?

According to HDFC Life, Exide Life’s embedded value as of 30 June 2021 is Rs 2,711 crore; examined by Willis Towers Watson Actuarial Advisory LLP. HDFC Life’s scale, market-leading digital and product innovation capabilities, and prudent risk management strategy will aid in optimizing the transaction cost. As well as achieve higher margins for the acquired business, over time.

Moreover, according to HDFC Life, the proposed merger will accelerate the expansion of its agency business. While also strengthening other distribution channels such as Broker, Direct, and Co-operative Banks. Furthermore, a high-quality, mostly traditional and protection-focused firm will add roughly 10% to HDFC Life’s existing embedded value. Exide Life’s strong presence in South India, particularly in Tier 2 and 3 cities, will provide access to larger markets.

According to HDFC Life, customers will benefit from a better product suite, a bigger distribution network, and more service touchpoints. It expects synergies to boost shareholder value; with the potential to boost new business margins through operating leverage and product mix optimization.

Deepak Parekh, Chairman of HDFC Life

The whole transaction, including the acquisition and eventual merger, is subject to receiving all necessary regulatory and other approvals.According to Deepak Parekh, Chairman of HDFC Life, “This merger is a landmark transaction, the first of its type in the Indian life insurance industry. It will potentially increase insurance penetration. Thus it will help us achieve our goal of providing financial protection to a larger number of people.” For more such updates, keep watching this space!

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HDFC Bank To Refund GPS Device Charge To Clients

 

HDFC bank announces that they will return its auto loan customers the commission charged for a GPS device bundled with the loans from fiscal 2014 to 2020. In a public notice, HDFC announces the refund and other important updations. The customers can expect the credit to the accounts as registered with the bank. This refund may cost nearly Rs 40 crore to the bank. This is a very small outgo for the bank. But, obviously, the scam causes embarrassment to the management.

History

Last year it came to the highlights that some employees at the auto loans department allegedly forced customers to buy GPS devices bundled with car loans. Also, there were some customers who were not even aware of purchasing such product, till the loan documents were checked. It was for the period between the years 2014-2020.

The employees in desperation to meet the sales target, started forcefully bundling the GPS devices with car loans.

What did the officials say?

The misconduct by HDFC bank officials was acknowledged by the former MD and CEO. The former dignitary Aditya Puri in the bank’s AGM mentions that an internal probe was conducted against a few erring employees. Appropriate action was taken further,” he added.

The Reserve Bank of India recently fined HDFC Bank 10 crore for irregularities found in its auto loan book.

The regulator said that after receiving a complaint from a whistleblower, it conducted an examination in the marketing and sale of third-party non-financial products to the bank’s auto loan customers. The RBI said it had found that the bank was in contravention of regulatory directions.

RBI Imposes penalty based on a whistleblower complaint

Aditya Puri is the former MD and CEO. The company’s annual general meeting held on July 18, 2020. He said, “We had received some whistle-blowing complaints. The internal inquiries carried out in the matter on the complaints received has not brought out any conflict-of-interest issue, nor does it have any bearing on our loan portfolio”.

After the internal probe last year, HDFC terminates at least six senior and mid-level executives. All the executives were allegedly engaged in activities that are considered to be corrupt. Certain activities violate the code of conduct of the bank.

For more such updates, keep watching this space!