TheNFAPost Podcast

Chennai, NFAPost: The Board of Directors of ICICI Lombard General Insurance Company and Bharti AXA General Insurance Company have entered 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 respective boards of ICICI Lombard and Bharti AXA, the shareholders of Bharti AXA shall receive 2 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 Board of Directors of ICICI Lombard and Bharti AXA.

ICICI Lombard General Insurance is one of the largest private sector non-life insurers in India based on gross direct premium income in fiscal 2020.

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. The combined entity shall have a market share of 8.7% on pro-forma basis.

Through this proposed transaction, ICICI Lombard shall be able to augment its distribution strength with Bharti AXA’s existing distribution partnerships. The combined entity shall also benefit from continued partnerships with Bharti Enterprises, one of India’s leading business groups with diversified interests, and AXA, a well-reputed global insurer.

ICICI Lombard General Insurance MD and CEO Bhargav Dasgupta said, “This is a landmark step in the journey of ICICI Lombard and we are confident that this transaction would be value accretive for our shareholders. We are excited by the capabilities and strengths that Bharti AXA will add to our franchise.”

He added that the company has a talented employee base with a strong cultural fit.

The proposed transaction is expected to result in value creation for all stakeholders through meaningful revenue and operational synergies. 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 through greater opportunities across functions and geographies.

The closing of the proposed transaction is subject to various conditions precedent, including regulatory approvals from the Insurance Regulatory and Development Authority of India, Competition Commission of India, The Securities and Exchange Board of India, Stock Exchanges, Reserve Bank of India, NCLT and approval of shareholders of both ICICI Lombard and Bharti AXA, amongst others. Upon obtaining all approvals, when the scheme becomes effective, the non-life insurance business will be demerged from Bharti AXA into ICICI Lombard.

Bharti AXA General Insurance Chairman Rakesh Bharti Mittal 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.”

Ernst & Young LLP (EY) acted as the exclusive M&A advisor to ICICI Lombard. AZB & Partners acted as the legal advisor to ICICI Lombard. Cyril Amarchand Mangaldas acted as legal advisor to Bharti and Talwar Thakore & Associates acted as legal advisor to AXA.

BDO Valuation Advisory LLP and MKSA & Associates recommended the share exchange ratio for the demerger of Bharti AXA into ICICI Lombard. Ernst & Young Merchant Banking Services LLP provided fairness opinion to the Board of ICICI Lombard.

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