Nod for 26% stake sale in HDFC Gen Insurance

Insurance Regulatory and Development Authority (IRDA) has approved the sale of 26% stake in HDFC General Insurance Company to ERGO International AG.

Housing Development Finance Corporation (HDFC) announced that IRDA has 'in principle' approved the transfer of 26% stake (32,500,000 equity shares of Rs 10 each) in HDFC General Insurance Company in favour of ERGO International AG - part of the Munich Re Group.

HDFC will receive Rs 235 crore from ERGO International AG for the 26% stake. The transaction is likely to be completed this month.

Deepak Parekh, chairman, HDFC, said: "General insurance has been one area where we have lagged behind... There are huge opportunities as the Indian economy is growing over 9%. We need to gear up and focus our energies to become one of the prominent players of this fast growing industry. ERGO is a leading player in Europe, and I am certain that their vast experience, technical expertise & operational know-how will make a big difference for this business."

The shareholders' agreement between the two companies was signed on October 30, 2007 between Deepak Parekh, chairman of the board of HDFC and Dr. Nikolaus von Bomhard, CEO of ERGO's parent company - the Munich Re Group.

HDFC General Insurance Company will be renamed HDFC ERGO General Insurance Company, and will be headquartered in Mumbai.