IRDA approves stake sale of 26% to ERGO International AG by HDFC Ltd

With reference to the earlier announcement dated October 30, 2007 regarding Insurance Regulatory and Development Authority (IRDA) has approved the sale of 26% stake in HDFC General Insurance Company Ltd by the Corporation to ERGO International AG, Housing Development Finance Corporation Ltd (HDFC) has announced that the Insurance Regulatory and Development Authority (IRDA) has 'in principle' approved the transfer of 26 per cent stake (32,500,000 equity shares of Rs 10/- each) in HDFC General Insurance Company Ltd (HGICL) held by HDFC Ltd in favour of ERGO International AG, part of the Munich Re Group.

HDFC Ltd will receive INR 235 Crores from ERGO International AG for the 26% share in the HDFC General Insurance Company Ltd. The transaction is likely to be completed during this month.

Mr. Deepak Parekh, Chairman HDFC Ltd. said, "General Insurance has been one area where we have lagged behind. There are huge opportunities as the Indian Economy is growing over 9%. 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 vast experience, technical expertise & operational know-how will make a big difference for this business."

The Shareholder's agreement between the two Companies was signed on October 30, 2007 between Mr. Deepak Parekh, Chairman of the Board of HDFC Ltd. and Dr. Nikolaus von Bomhard, CEO of ERGO's parent Company - the Munich Re Group. HDFC General Insurance Company Ltd Company will be renamed as HDFC ERGO General Insurance Company Ltd and will be headquartered in Mumbai.

The new partnership will enable HDFC Ltd. to successfully grow its existing general insurance operations by further leveraging their outstanding brand equity and distribution strengths. For ERGO, entering the joint venture with HDFC Ltd. underlines the Group's international expansion strategy and offers a direct entry into the Indian general insurance market.