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HDFC Life may consider listing as merger with Max is delayed

25 May, 2017

HDFC Standard Life Insurance Co. Ltd (HDFC Life), the life insurance arm of mortgage lender HDFC Ltd, said it may go for a listing after the insurance regulator has expressed reservations to accept the plan of merger between the company and Max Financial Services Ltd, the listed holding firm of Analjit Singh-promoted Max Life Insurance Co Ltd.

Both the options – moving towards an IPO and waiting for an amalgamation – are under consideration, Amitabh Chaudhry, MD and CEO of HDFC Life, told ET Now.

“IPO is a definite possibility and we cannot keep waiting forever to just get the merger through. We are at least six to eight months behind as nothing much has happened since November when the issue was raised on the structure,” he said.

Another report by The Economic Times said attorney general Mukul Rohatgi returned a file from the Insurance Regulatory and Development Authority of India (IRDAI) seeking his opinion on whether to permit the merger.

In November last year, IRDA had expressed reservations citing lack of provisions for such a merger under the existing terms and conditions.

In a tiered structure, the merger will initially involve the amalgamation of Max Life with Max Financial Services. For this, the shareholders of Max Life will get one share each of Max Financial Services for approximately five shares of Max Life.

The life insurance unit will then be demerged into HDFC Life. Separately, Max Financial Services will be merged into another listed company of the Max group – Max India. For the demerger, the shareholders of Max Financial Services, after the amalgamation with Max Life, will get 2.33 shares of HDFC Life for each share of Max Financial Services.

If approved, the merger would create India’s largest private sector life insurer, with annual premium worth Rs 255 billion, surpassing ICICI Prudential Life Insurance Co. Ltd. It will be second only to state-run Life Insurance Corp. of India, which has a 70% share of new business premiums in the country.

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HDFC Life may consider listing as merger with Max is delayed

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