Apollo Energy Company Ltd, an Apollo Hospitals Group company, will divest 23.3 per cent shareholding in Apollo Munich Health Insurance Company Ltd. to its joint venture partner Munich Re of Germany for Rs.163.5 crore.
This was approved by the Board of Apollo Energy at a meeting held on Monday, an announcement by the company said. The proposed transaction values Apollo Munich at Rs.703 crore.
Post the transaction, which is expected to be completed by end of the first quarter of 2016, Apollo Hospitals Group’s shareholding in Apollo Munich would be 51.1 per cent. Consequently, Munich Re’s shareholding in the health insurance JV would move to 48.7 per cent and 0.2 per cent will be held by employees.
Providing the backdrop to the transaction is the March 2015 decision of the Indian Government to increase the foreign direct investment (FDI) cap in the insurance sector from 26 to 49 per cent.
Chairman of Apollo Munich Health Insurance and Apollo Hospitals Enterprise Ltd Prathap C Reddy welcomed the development and said: “The show of confidence from our JV partner will go a long way in helping the Group achieve its vision of healthcare for all.
A release said that with the increase in shareholding Munich Re strengthens its presence in India, which is one of the key markets for the company.
Member of the Munich Re Board of Management responsible for Munich Health Doris Höpke said: “With the increased stakeholding we are strengthening our position for sustainable and profitable growth in this region.”
India’s population structure, increased life expectancy and positive economic development, he said, would usher in a steep rise in medium-term healthcare spending. Since its start in 2007, Apollo Munich Health Insurance has “shown exceptional, often above-market growth rates.”
Axis Capital acted as the financial adviser to the Apollo Hospitals group for the transaction, the release said.