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Standard Life To Increase Its Stake In HDFC Life To 35%

Monday, August 17, 2015
By A Business Reporter

The “stake increase reiterates the trust and commitment of Standard Life towards the Indian life insurance sector and specifically for HDFC Life. Both promoter shareholders have been very supportive of our strategy and growth over the last few years. This transaction is in line with the long-term vision of shareholders to jointly build a world class life insurance company. We continue to focus on long-term protection and saving needs of India and delivering sustainable performance,” said Amitabh Chaudhry, MD & CEO of HDFC Life. He was commenting on Standard Life’s decision to increase its stake in HDFC Life To 35%

Similarly a beaming Deepak Parekh, Chairman, HDFC Limited said, “I am delighted that Standard Life is increasing its stake in HDFC Life to 35 %. 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.”

Equally, enthusiastic was Keith Skeoch, CEO of Standard Life plc as he said, “Today’s announcement marks a strengthening of our well-established relationship with HDFC. The proposed investment demonstrates our long-term commitment to India and the future success of HDFC Life.

Incidentally, 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. 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%. 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. After the increase in the foreign ownership limits in the sector, Standard Life and HDFC have had discussions and today’s agreement will see Standard Life increase its stake in HDFC Life to only 35%, its preferred long-term shareholding, without parity.

As per the agreement, subject to receiving all necessary regulatory approvals, Standard Life will acquire 9% of the shares of HDFC Life from HDFC at a price of Rs. 95 per share. As a consequence, Standard Life will increase its shareholding in HDFC Life to 35% from 26% at present. Accordingly, HDFC’s shareholding in HDFC Life would then stand at 61.65%.

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