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Wednesday, September 30, 2020

ICICI Lombard, Bharti AXA to merge in share swap deal to form 3rd largest general insurer

Bharti Axa shareholders to receive 2 shares of ICICI Lombard for every 115 shares.

By: ENS Economic Bureau | Mumbai | August 23, 2020 1:11:03 am
The combined entity shall have a market share of 8.7 per cent on pro-forma basis.

ICICI Lombard General Insurance Company and Bharti AXA General Insurance Co Ltd on Saturday said they will combine their insurance businesses through a share swap deal, paving the way for the creation of the country’s third-largest general insurance entity.

The boards of both the companies approved entering into definitive agreements for demerger of Bharti AXA’s non-life insurance business into ICICI Lombard through a Scheme of Arrangement. Based on the share exchange ratio recommended by independent valuers and accepted by the boards, the shareholders of Bharti AXA will receive two shares of ICICI Lombard for every 115 shares of Bharti AXA held by them as on the date on which the Scheme of Arrangement is approved by the boards of both the companies.

ICICI Bank holds 51.89 per cent stake in ICICI Lombard, while the rest is with the public. After the proposed deal, promoter stake will come down to 48.11 per cent. ICICI Lombard shares closed at Rs 1,292.90, down 0.40 per cent, on the BSE on Friday.

“The proposed transaction provides a meaningful opportunity for ICICI Lombard to consolidate its market leading position in the non-life insurance sector, becoming the third largest non-life insurer,” ICICI Lombard said in a statement.

The combined entity shall have a market share of 8.7 per cent on pro-forma basis. “Through this proposed transaction, ICICI Lombard will be able to augment its distribution strength with Bharti AXA’s existing distribution partnerships,” it said in the statement.

“The combined entity will also benefit from continued partnerships with Bharti Enterprises, one of India’s leading business groups with diversified interests, and AXA, a large global insurer,” the statement said.

The proposed transaction is expected to result in value creation for all stakeholders through meaningful revenue and operational synergies, it said. “Policyholders are also expected to gain from an enhanced product suite and deeper customer connect touch points. Employees of the combined business will also benefit via greater opportunities across functions and geographies,” ICICI Lombard said.

After obtaining all approvals, when the scheme becomes effective, the non-life insurance business will be demerged from Bharti AXA into ICICI Lombard.

Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance, said, “We are confident that this transaction would be value accretive for our shareholders. We would also like to reassure Bharti AXA’s policyholders and channel partners of seamless business continuity and maintaining highest standards of customer service.” ICICI Lombard made a profit of Rs 398 crore and gross premium underwritten of Rs 3,394 crore in the June quarter of 2020-21.

Rakesh Bharti Mittal, Chairman of Bharti AXA General Insurance said, “We are delighted that the partnership between Bharti and AXA has been successful in laying down a solid foundation in the domestic insurance landscape. Over the past few years, our business demonstrated consistent growth, forged productive partnerships and increased the distribution footprint significantly.”

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