Housing Development Finance Corporation (HDFC) has sold 44,12,000 equity shares representing 0.62 per cent of the issued and paid-up share capital of HDFC ERGO. With this move, the non-banking financial company will bring down its shareholding in the general insurance company below 50 per cent, the listed company said in its filing.
The company stated it entered into a share purchase agreement for sale of 44,12,000 equity shares of Rs 10 each. The company stated the sale is for “Rs 2,364,832,000 as cash consideration, i.e. Rs. 536 per equity share”. The company selling it to ERGO International AG, a foreign promoter of HDFC ERGO.
The sale took place on May 8, 2021 and the process will be completed on May 12, 2021.
The sale in shares was in accordance with the direction of Reserve Bank of India to reduce HDFC’s shareholding in HDFC ERGO to 50 per cent or below.
After this sale, HDFC ERGO would cease to be a subsidiary company of HDFC under the provisions of the Companies Act, 2013.
In May 2020, the regulator asked HDFC to reduce its stake in insurance companies HDFC Life Insurance and HDFC ERGO to 50 per cent or below. Before the sale, the NBFC held a 50.58 per cent stake in HDFC ERGO.
The total income of HDFC ERGO for the year ended March 31, 2021 was Rs 7,557.50 crore, which was 5.43 per cent of the consolidated income of HDFC. The net worth of HDFC ERGO as of March 31, 2021 was Rs 3,253.55 crore which was 1.96 per cent of the consolidated net worth of HDFC, the NBFC stated in its filing.
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