IRDAI gives final nod to Bharti Axa-ICICI Lombard Deal

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Bharti AXA General Insurance’s and ICICI Lombard General Insurance’s deal demerger of the general insurance business through a scheme of arrangement has got final approval from Insurance Regulatory and Development Authority of India (IRDAI). As per the June filing, IRDAI has approved ICICI bank to bring down its shares in ICICI Lombard to 30% from 51.87%. The ICICI Lombard has confirmed in a regulatory filing that IRDAI has sanctioned final approval to its proposed scheme.

ICICI Lombard said that April 1, 2020, is the appointed date for the scheme. The schemes stated that the demerger and transfer of the general insurance business will be effective within three days from the date of the final approval.

ICICI Lombard had announced to acquire the general insurance business of Bharti Axa General in share swap deal.

Earlier in August, ICICI Lombard had said that as on the date on which the scheme of arrangement is approved by the board of directors of the two companies, the shareholders of Bharti AXA General will receive two shares of ICICI Lombard for every 115 shares of Bharti AXA General held by them.

About 35.8 million shares of ICICI Lombard will be received by AXA and Bharti under the terms, on closing. This would represent 521 million euros, at the current market value of the closing price of ICICI Lombard shares on August 21. The companies will monitor the demerger challenges like the retention of employees and customers.

In May, the credit ratings agency ICRA had also pointed out that as the expense ratios of Bharti Axa General are higher, it would have a short-term impact on the combined ratio of the merged entity.

The promoter holding in ICICI Lombard will be 48.11% and public holding will be 51.89% after the deal and Bharti and AXA will be public shareholders.