HDFC is planning to get its mutual fund arm listed later this year. The housing finance company has been unlocking value from its various arms, the latest being a Rs 202-crore gain from the sale of its general insurance company’s shares this month.
HDFC said it has received clearance from the regulator to sell a 26% stake in its general insurance subsidiary to ERGO International, a part of the Munich Re group. The general insurance company, which was earlier known as HDFC Chubb, will now be renamed to reflect the new shareholding.
Following the announcement, HDFC’s share price rose Rs 68.4 to Rs 2,781.7 an increase of 2.52% on a day the Sensex fell 204 points. HDFC will receive Rs 235 crore from ERGO International for the 26% share in the HDFC General Insurance.
The transaction, which includes 3.25 crore shares with a face value of Rs 32.5 crore, is likely to be completed by this month. Deepak Parekh, chairman, HDFC said the non-life company would not require immediate capital from the promoters. “The capital requirements of a non-life company are far lower than that of a life company.”
Commenting on the plans for HDFC Mutual Fund, Mr Parekh said the company would look at listing its asset management arm later this year. The stockmarket’s interest in shares of asset management have gone up after the decision by UTI Asset Management to get itself listed. While mutual funds were earlier valued at 4-6% of their assets under management, this has gone up with Reliance Mutual Fund deal which saw the AMC being valued at 13% of its AUM.
Mr Parekh said the mutual fund arm was likely to go public before the life insurance arm. According to sources, an IPO by a life company would have to necessarily exclude foreign investors as foreign shareholding is capped at 26% for all insurance companies. While the life insurance and mutual fund subsidiaries have leading positions, the non-life arm has lagged behind.
“General Insurance has been one area where we have lagged behind. 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 experience, technical expertise and operational know-how will make a big difference for this business,” said Mr Parekh
The shareholder’s agreement between the two companies was signed on 30 October 2007 between Deepak Parekh, chairman of the board of HDFC and Nikolaus von Bomhard, CEO of ERGO’s parent company Munich Re Group. HDFC General Insurance will be renamed as HDFC ERGO General Insurance Company and will be headquartered in Mumbai.
HDFC said it has received clearance from the regulator to sell a 26% stake in its general insurance subsidiary to ERGO International, a part of the Munich Re group. The general insurance company, which was earlier known as HDFC Chubb, will now be renamed to reflect the new shareholding.
Following the announcement, HDFC’s share price rose Rs 68.4 to Rs 2,781.7 an increase of 2.52% on a day the Sensex fell 204 points. HDFC will receive Rs 235 crore from ERGO International for the 26% share in the HDFC General Insurance.
The transaction, which includes 3.25 crore shares with a face value of Rs 32.5 crore, is likely to be completed by this month. Deepak Parekh, chairman, HDFC said the non-life company would not require immediate capital from the promoters. “The capital requirements of a non-life company are far lower than that of a life company.”
Commenting on the plans for HDFC Mutual Fund, Mr Parekh said the company would look at listing its asset management arm later this year. The stockmarket’s interest in shares of asset management have gone up after the decision by UTI Asset Management to get itself listed. While mutual funds were earlier valued at 4-6% of their assets under management, this has gone up with Reliance Mutual Fund deal which saw the AMC being valued at 13% of its AUM.
Mr Parekh said the mutual fund arm was likely to go public before the life insurance arm. According to sources, an IPO by a life company would have to necessarily exclude foreign investors as foreign shareholding is capped at 26% for all insurance companies. While the life insurance and mutual fund subsidiaries have leading positions, the non-life arm has lagged behind.
“General Insurance has been one area where we have lagged behind. 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 experience, technical expertise and operational know-how will make a big difference for this business,” said Mr Parekh
The shareholder’s agreement between the two companies was signed on 30 October 2007 between Deepak Parekh, chairman of the board of HDFC and Nikolaus von Bomhard, CEO of ERGO’s parent company Munich Re Group. HDFC General Insurance will be renamed as HDFC ERGO General Insurance Company and will be headquartered in Mumbai.
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