INDIA BUSINESS WORLD - OCTOBER 21st - NOVEMBER 15th
- 2007
ERGO PICKS UP 26% IN HDFC INSURANCE ARM
Mumbai-based Housing Development Finance Corp (HDFC), has announced that it has sold 26% equity in its general insurance business to German insurer Ergo for an undisclosed amount. The country's largest housing finance company, will sell 32.5 million shares in HDFC General Insurance to Ergo, equivalent to 26% stake. The joint venture (JV) agreement also allows the German company to hike its stake to 49% as and when the FDI regulations change.
"We are selling 26% equity in our general insurance to Ergo. We will be applying to the regulator and hope to get the approval within the next four weeks," said HDFC chairman Deepak Parekh.
The joint venture, which will be called HDFC Ergo General Insurance, has a capitalisation of about $30 million.
Earlier this year, HDFC bought its partner Chubb Corp's 26% stake in the general insurance venture after an uneasy relationship stalled growth.
HDFC, which has a presence in the life insurance space through its JV with UK-based insurer Standard Life, is also looking to take the business public by early 2009.
"We are 3-4 years away from listing the general insurance company but the life insurance entity may be listed in the next 12-15 months," added Mr. Parekh. Ergo, which is the insurance arm of reinsurance major Munich Re, is also looking to ink a JV agreement in the life insurance segment. "We are hoping to sign a JV in the life space and unlike the general insurance JV, we will start a fresh company and not buy stake in an ongoing business," said Munich Re CEO Nikolaus von Bomhard.
This is the company's second JV this year. DKV, which is the health insurance arm of Munich Re recently inked a JV with Chennai-based Apollo group.
HDFC Ergo General insurance will continue to offer all the health insurance products currently offered by HDFC general insurance. "We will not take back any of our products. We may look at marketing products of Apollo DKV for a fixed fee or look at a threeway JV or may even enter into another JV for health insurance with a separate partner. It depends on what the regulators feel about it," added Mr Parekh.
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