Share swap deal: Bharti AXA to merge with ICICI Lombard

Bharti AXA’s non-life insurance business will be merged with ICICI Lombard General Insurance through a share swap deal. Post the deal, ICICI Lombard will become the third-largest non-life insurer and the combined entity shall have a market share of around 8.7% on pro-forma basis. The financial details were not disclosed, but sources in the industry said the deal is valued at Rs 4,000-Rs 4,500 crore.

ICICI Lombard in its press release stated that based on the share exchange ratio recommended by independent valuers and accepted by the respective boards of ICICI Lombard and Bharti AXA, the shareholders of Bharti AXA shall receive two shares of ICICI Lombard for every 115 shares of Bharti AXA held by them as on the date on which the Scheme of Arrangement is approved by the board. Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance, said, “This is a landmark step in the journey of ICICI Lombard and we are confident that this transaction would be value accretive for our shareholders.”

“We are excited by the capabilities and strengths that Bharti AXA will add to our franchise. The company has a talented employee base with a strong cultural fit, and we look forward to welcoming them to the ICICI Lombard family,” Dasgupta added.

Bharti AXA General Insurance is a joint venture between Bharti, one of India’s leading business groups with interests in telecom, agriculture business and retail, and AXA, one of the world’s leading insurance and asset management company. The joint venture company has a 51% stake from Bharti and 49% stake of AXA.

Currently, promoters of ICICI Lombard General Insurance hold 51.89% in the company, while rest is with the public. After the proposed deal, promoters’ stakes will come down to 48.11%.

The data from Insurance Regulatory and Development Authority of India (Irdai) shows that ICICI Lombard has underwritten gross direct premium at Rs 4,391.29 crore between April and July this year and having a market share of 7.79%. Bharti AXA General Insurance has a market share of 1.44% as on July 2020.

Rakesh Bharti Mittal, chairman of Bharti AXA General Insurance, said, “We are delighted that the partnership between Bharti and AXA has been successful in laying down a solid foundation in the domestic insurance landscape. Over the past few years, our business demonstrated consistent growth, forged productive partnerships and increased the distribution footprint significantly. We are confident that the proposed amalgamation of our business with ICICI Lombard will bring greater business synergies and create value for all stakeholders.”