HDFC Life, Max Life to Chalk Out New Ways to Merge


Mumbai: HDFC Life and Max Life have gone back to the drawing board to make their merger plans work, which includes proposals to merge the two insurance companies directly instead of the proposed convoluted way , or list HDFC life on stock exchanges and then merge the two insurers, said three people famil iar with the matter.

“We are reworking the struc ture but any structure has to satisfy Section 35 of the Insurance Act from both the merger and tax implications point of view,“ said Amitabh Chaudhary C E O, H D F C L i f e Insurance. “Any new structure will take 15-18 months to get approvals.“

Meanwhile, HDFC said in regulatory filing that: “With ref erence to scheme of amalgamation involving HDFC Life, Max Financial Services, Max Life Insurance and Max India, the Corporation (HDFC) has become aware of recent media reports of certain developments of the proposed merger, but has not received any independent confirmation in this regard from any regulator government authority .“

Irda raised reservations on the structure, which involved merging Max Fin Services with Max Life, fol lowed by a demerger of life insurance business to be merged with HDFC Life.

“If AG has returned the file, they (HDFC and Max Financial Services) will have to submit plan B,“ said a senior Irda official.Chaudhary said if it takes too long, HDFC Life would go for an IPO first and merge the two companies later. “We can’t wait forever,“ said Chaudhry . The fresh deal will need approvals from several sharehold ers including Standard Life, ax Group, Mitsui Sumitomo and Axis Bank. In HDFC Life, HDFC owns 62% while Standard Life 35%. Max Financial a n d Mitsui Sumitomo current ly hold 68% and 26%, respectively, of Max Life.

In 2016, before the proposed merger, HDFC Life has called investment bankers for an IPO. This merger would have given automatic listing to HDFC Life. “We had done a lot of pre paratory work on IPO last year,“ said Keki Mistry , vice-chairman, HDFC.With the insurance regulator objecting to Max LifeHDFC Life merger proposal as planned after the AG declined to opine on the matter, conflicting signals are emerging on whether the consolidation would happen first or IPO of HDFC Life. HDFC’s Keki Mistry says the company would try to rework the proposal and submit it to the regulator while remaining open to revive its IPO plan, but Max Group founder Analjit Singh said HDFC and Max are committed to finding a way for the merger to happen.

Source : The Economic Times

Date : 25-05-2017

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