Apollo Hospitals gains over 3% after sale of health insurance biz to HDFC

Shares of Apollo Hospitals rose 3.8 per cent to Rs 1,404 while those of Housing Development Finance Corporation (HDFC) climbed 1 per cent to Rs 2,200 after it was announced that the mortgage lender would acquire controlling stake of 51.2 per cent in the Apollo Munich Health Insurance for about Rs 1,347 crore.

After the acquisition, Apollo Munich Health Insurance will be merged with the non-life insurance arm of mortgage lender HDFC Ergo. The deal is subject to regulatory approvals and the entire process is expected to be completed in nine months. READ THE PRESS RELEASE HERE

Ergo International AG, which holds 49 per cent stake in HDFC Ergo, is a subsidiary of Munich Re and Munich Re also holds stake in Apollo Munich Health Insurance. After the amalgamation, Munich Re will continue to hold 49 per cent stake in HDFC Ergo and the combined entity will have a gross direct premium of Rs 10,807 crore.

To support the transaction with its material benefits for Apollo Munich, Munich Health will give Rs 294 crore to Apollo Hospitals Enterprises and Apollo Energy in connection with the termination of their joint venture.

The merged entity will have a combined market share of 6.4 per cent in the non-life insurance industry with 308 branches in the country. It will also be the second largest private insurer in the accident and health segment in the country, HDFC said in a statement. The combined entity will have a portfolio mix of 39 per cent accident and health insurance, 28 per cent health insurance and the rest will be commercial and crop insurance.

At 9:47 AM, Apollo Hospitals was trading 2.17 per cent higher at Rs 1,381.60 and HDFC was up 0.8 per cent at Rs 2,196 as compared to a 0.05 per cent hike in the benchmark S&P BSE Sensex.