Azim Premji Trust picks up near 1% stake in HDFC Life for Rs 199 cr

Housing Development Finance Corporation (HDFC) on Monday said Azim Premji Trust would buy 0.95 per cent stake in its life insurance venture, HDFC Life, for Rs 198.9 crore. The deal values HDFC Life at Rs 19,890 crore.

HDFC has concluded the sale of the first tranche of 11 million shares. After the entire sale of equity shares is completed, the company will hold 71.42 per cent of the total issued and paid-up equity capital of HDFC Life.

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

In 2013-14, the total premium collected by HDFC Life increased seven per cent to Rs 12,063 crore compared to 2012-13. For the April-September period this year, HDFC Life posted a net profit of Rs 454.3 crore, against Rs 423.5 crore in the corresponding period last year. In April-September, it had collected Rs 5864.98 crore of premia. Data from the Life Insurance Council showed new premia for April-November stood at Rs 2753.67 crore, compared with Rs 2224.35 crore in the corresponding period last year. During this period, the overall sector contracted 1.28 per cent.

Through the next five years, the life insurance sector is projected to grow at a compounded annual rate of 12-15 per cent. By 2020, insurance penetration is expected to rise to five per cent of gross domestic product from the current 3.2 per cent.

HDFC Life is among a handful of private life insurers eyeing an initial public offering. Experts say with the insurance Bill likely to be passed in the next few weeks (through passage in Parliament or an ordinance), players such as HDFC Life will have an option to increase the stake of the foreign partner to 49 per cent.

HDFC Bank