ICICI Lombard General Insurance is acquiring Bharti Enterprises-promoted Bharti AXA General Insurance in an all-stock deal.
Shareholders of Bharti AXA will receive two shares of ICICI Lombard for every 115 shares of Bharti AXA held by them on the date the “scheme of arrangement” is approved by the board of both the entities, a statement said.
The share-exchange ratio was recommended by independent valuers and accepted by the respective boards of ICICI Lombard and Bharti AXA.
Bharti Enterprises at present owns a 51 per cent stake in Bharti AXA General Insurance, while French insurer AXA has 49 per cent. In ICICI Lombard, the ICICI Bank holds a stake of 51.89 per cent.
The board of ICICI Lombard General Insurance “at its meeting held on August 21, considered and approved a scheme of arrangement among Bharti AXA General Insurance and the former company and their respective shareholders and creditors”, ICICI Lombard said in a late night filing on Friday.
Post demerger, Bharti AXA General Insurance will cease to be a going concern and both Bharti Enterprises and AXA will exit the non-life business.
The consolidation is beneficial for and in the interest of the policyholders as the demerger creates a more robust and financially strong insurer that can offer a wider product suite, more access points and comprehensive services to customers after the completion of the scheme, the general insurers said.
“The proposed transaction provides a meaningful opportunity for ICICI Lombard to consolidate its leadership position in the non-life insurance sector, becoming the third largest non-life insurer. The combined entity shall have a market share of about 8.7 per cent on a pro-forma basis,” ICICI Lombard said.
The board approved the proposed scheme of demerger, subject to all applicable statutory and regulatory approvals, including from the Insurance Regulatory and Development Authority, the Competition Commission of India, stock exchanges, Sebi, shareholders and creditors of the companies involved in the scheme and the relevant jurisdictional benches of the National Company Law Tribunal, the company said.
“We would also like to reassure Bharti AXA’s policyholders and channel partners of seamless business continuity and maintaining the highest standards of customer service,” ICICI Lombard CEO Bhargav Dasgupta said.
Bharti Enterprises has been trying for quite some time to exit the financial services business.
In 2011, Bharti Enterprises’ talks with Reliance Industries to sell its 74 per cent stake in Bharti AXA Life Insurance and Bharti AXA General Insurance could not reach the logical conclusion.
For the fiscal year ended March 2020, Bharti AXA General Insurance reported a 38 per cent increase in its gross premium collection at Rs 3,157 crore against Rs 2,285 crore in the previous fiscal.
Ernst & Young LLP (EY) was the exclusive advisor to ICICI Lombard for this merger.
AZB & Partners acted as the legal advisor to ICICI Lombard, while Cyril Amarchand Mangaldas acted as the legal advisor to Bharti. Talwar Thakore & Associates acted as the legal advisor to AXA.
