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HDFC Ltd. has increased its stake in HDFC Ergo by acquiring an additional 0.5097% of equity shares, making it a subsidiary as part of the reverse merger with HDFC Bank.
New Delhi: HDFC Ltd. announced on Friday that it has acquired an additional 36,42,290 equity shares of HDFC Ergo General Insurance Company Limited, representing 0.5097% of its total issued and paid-up share capital. The shares were purchased from ERGO International AG, the other promoter of HDFC Ergo. This acquisition increases HDFC Ltd.'s total stake in HDFC Ergo to 50.50%, officially making HDFC Ergo a subsidiary of HDFC Ltd.
This move is part of the larger reverse merger exercise between HDFC Ltd. and its banking subsidiary, HDFC Bank, which is expected to be effective from July 1, 2023. The Reserve Bank of India (RBI) had previously approved the transfer of HDFC Ltd.'s shareholding in HDFC Ergo to HDFC Bank. The RBI also advised that either HDFC Ltd. or HDFC Bank should increase their shareholding in the general insurance company to over 50% before the merger's effective date.
The acquisition ensures compliance with regulatory requirements and streamlines the merger process, integrating the insurance business more closely with the HDFC group's financial services ecosystem. The merger is anticipated to create a larger, more diversified financial institution, enhancing efficiency and offering a broader range of services to customers.
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