Housing finance major HDFC Ltd is selling 0.62 percent of its stake in general insurance subsidiary HDFC Ergo to the foreign JV partner Ergo International for over Rs 236 crore to meet regulatory norms.
The Housing Development Finance Corporation Ltd (HDFC) is required to reduce its shareholding in HDFC Ergo to 50 percent or below as per an RBI directive.
HDFC has today entered into a share purchase agreement for sale of 44,12,000 equity shares of Rs 10 each, representing 0.62 percent of the issued and paid-up share capital of HDFC Ergo, the mortgage lender said in a regulatory filing on Saturday.
The agreement contains "the sale of 44,12,000 equity shares of HDFC Ergo by HDFC, Indian promoter of HDFC Ergo to Ergo International AG, foreign promoter of HDFC Ergo," it said in the filing.
Ergo International AG does not belong to the promoter/promoter group of HDFC, it added.
The sale is expected to be completed by May 12, 2021, for a cash consideration of Rs 2,364,832,000 i.e., Rs 536 per equity share, HDFC said in the filing.
The total income of HDFC Ergo for year ended March 31, 2021 was Rs 7,557.50 crore, which was 5.43 percent of the consolidated income of HDFC.
The insurer's networth stood at Rs 3,253.55 crore which was 1.96 percent of the consolidated net worth of HDFC Ltd.
"Subsequent to the sale, HDFC Ergo would cease to be a subsidiary company of HDFC under the provisions of the Companies Act, 2013," it added.
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