ICICI Lombard General Insurance Co. Ltd.(ICICI Lombard) and Bharti AXA General Insurance Co. Ltd.(Bharti AXA) have signed definitive agreements to merge their insurance business. The merger will happen through a scheme of arrangement. The proposed merged non-life insurance company(combined entity) will have a market share of 8.7% on a pro-forma basis. The deal values Bharti AXA at around Rs 2,700 crore.
- Once the deal is completed the combined entity will become the largest private non-life insurer and the 3rd largest non-life insurer in the general insurance industry after New India Assurance and United India Insurance.
Note– The financial details were not disclosed.
Highlights of the merger
2 shares for every 115 shares
i.The shareholders of Bharti AXA will receive 2 shares of ICICI Lombard for every 115 shares of Bharti AXA, held by them as on the date on which the scheme is approved by the board.
ii.This decision is based on the share exchange ratio as recommended by independent valuers and accepted by the respective boards of ICICI Lombard and Bharti AXA.
Shares will be allotted at Rs 10 each to the demerged company
i.As a part of the deal, shareholders of the demerged company( i.e. Bharti and AXA) will be allotted equity shares of the combined entity of Rs 10 each, where Bharti will receive 18.23 million shares and AXA will receive 17.52 million shares which will amount to 521 million euro.
ICICI Bank Ltd’s holdings in ICICI Lombard comes down to 48.11%
Currently promoter ICICI Bank Ltd holds is 51.89% stake in ICICI Lombard & the rest by the public. After the deal ICICI Bank Ltd stake will come down to 48.11%.
Bharti Enterprises and AXA categorised as public shareholders
i.Bharti Enterprises holds 51% and French multinational insurer AXA holds 49% in Bharti AXA General.
ii.Post the merger, no special rights will be given to Bharti Enterprises or AXA and they will be categorised as public shareholders in the combined entity after the deal.
iii.Both Bharti Enterprises and AXA will exit non-life business after the merger
Total Annual Premium to be earned
The proposed merged non-life insurance company is expected to earn a total annual premium of at least Rs 16,447 crore on a combined basis with a market share of around 8.7%.
Proposed Transaction is subjected to Various conditions
The proposed transaction is subject to various conditions, including regulatory approvals from following:
The Insurance Regulatory and Development Authority of India(IRDAI), Competition Commission of India(CCI), The Securities and Exchange Board of India(SEBI), Stock Exchanges, Reserve Bank of India(RBI), National Company Law Tribunal(NCLT) and approval of shareholders of both ICICI Lombard and Bharti AXA, among others.
It is to be noted that this is the 3rd merger deal in the insurance sector after HDFC ERGO’s acquisition of L&T General Insurance in August 2017 and HDFC ERGO completing acquisition of Apollo Munich Health Insurance in January 2020.
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About Bharti AXA General Insurance Co. Ltd.
Headquarters– Mumbai, Maharashtra
Managing Director(MD) and Chief Executive Officer(CEO)– Sanjeev Srinivasan
About ICICI Lombard General Insurance Co. Ltd.
HeadQuarter– Mumbai, Maharashtra
MD & CEO– Bhargav Dasgupta