ICICI Lombard General Insurance Company Limited, the Indian general insurance company engaged in general insurance, reinsurance, insurance claims management, and investments management, has recently got permission to acquire Bharti AXA General Insurance from the Insurance Regulatory and Development Authority of India (IRDAI). The in-principle approval was given on 27 November 2020.
The acquisition proposed by ICICI was already permitted by Bombay Stock Exchange Limited (BSE), National Stock Exchange Limited (NSE), and the Competition Commission of India (CCI). ICICI Lombard stated that, with the happening of the proposed transaction, they will be having a market share of 8.7% based on a proforma in the non-life insurance business. Further, the proposed transaction will result in value creation for all stakeholders by creating meaningful revenue and operational synergy.
India’s largest private non-life insurer, ICICI Lombard claims that with the acquisition the policyholders could benefit from an enhanced product suite and deeper customer connect touchpoints. Based on the proposed combination ICICI Lombard will be taking the entire general insurance business of Bharti AXA General Insurance Company in consideration of issuance of shares by ICICI Lombard to Bharti AXA.
Based on the reports shareholders of Bharti AXA will be receiving two shares for every 115 shares they have in Bharti AXA. This is ascertained based on the recommendations of independent valuers by considering the share exchange ratio. Currently, 51.89% of the stake in ICICI Lombard is with ICICI Bank Limited. After the acquisition of Bharti AXA General Insurance, the promoter’s stake in the company will be reduced to 48.11%. The shareholders of the demerged company will be allotted with equity shares of Rs. 10 each, where Bharti shareholders will be receiving 18.23 million shares and AXA shareholders will be receiving 17.52 million shares in the combined entity.
After the acquisition, the combined entity will have ICICI Lombard as a listed insurance company and Bharti and AXA will be public shareholders. The two companies have reported that the combined entity is expected to earn a total annual premium of at least Rs.16,447 crore having an approximate market share of 8.7%.