Standard Life to raise stake in HDFC Life to 35%

To pay Rs 1,705 crore for a 9% stake; deal values HDFC Life at Rs 18,951 crore

Standard Life (Mauritius Holdings) 2006 Limited will buy an additional stake of nine per cent in its Indian insurance venture, HDFC Life, which will increase its stake in the firm from 26 per cent to 35 per cent.

The foreign insurer will pay Rs 1,705 crore for the nine per cent stake, valuing the company at Rs 18,951.4 crore.

Housing Development Finance Corporation (HDFC) on Friday informed the exchanges that it would sell nearly 179 million (17,95,39,209) equity shares of HDFC Life to Standard Life (Mauritius Holdings) at Rs 95 a share, aggregating to nine per cent of the issued and paid-up share capital of HDFC Life.

This is subject to the receipt of requisite approvals.

HDFC Life is a joint venture between HDFC and Standard Life, a provider of financial services in the UK. Standard Life (Mauritius Holdings) holds a 26 per cent stake in the joint venture.

According to HDFC, after the deal, its holding in HDFC Life will be 61.65 per cent and that of Standard Life (Mauritius Holdings) will be 35 per cent.

In 2000, HDFC and Standard Life launched a joint venture, HDFC Life, which was the first private life insurance company to be granted a licence to operate in India.

Deepak Parekh, chairman of HDFC, said, "The founding shareholders are also committed to obtaining a listing for HDFC Life. This will allow investors to participate in the growing Indian insurance sector."

In line with the laws governing foreign ownership in the insurance sector, Standard Life's ownership in HDFC Life has thus far been restricted to 26 per cent.

"A long-held understanding between HDFC and Standard Life was that Standard Life would increase its shareholding to parity with HDFC at such time as legislation allowed," HDFC said in a press release.

Keith Skeoch, CEO of Standard Life, said: "The proposed investment demonstrates our long-term commitment to India and the future success of HDFC Life."

Amitabh Chaudhry, managing director and CEO of HDFC Life, said the deal reiterates the trust and commitment of Standard Life towards the Indian life insurance sector and specifically for HDFC Life. He added that both promoter shareholders have been quite supportive of their strategy and growth over the last few years.

In December last year, Azim Premji Trust had decided to buy a 0.95 per cent stake in HDFC Life for Rs 198.9 crore. The deal had valued HDFC Life at Rs 19,890 crore.

Till now, only AXA has got the approval from the Foreign Investment Promotion Board to increase stake to 49 per cent in its life and general insurance companies in India with the Bharti Enterprises.