HDFC, Max Life not to pursue life insurance merger deal

MUMBAI: The proposed merger of HDFC Life with Max Life is dead with the expiry of the standstill agreement and both parties deciding not to extend it further.
Max India Ltd – parent of Max Life Insurance -- said in a statement to the exchange that the confidentiality, exclusivity and standstill agreement dated June 17, 2016 entered among the parties, is not being extended further.“The proposed scheme and the applications filed in this regard with the stock exchanges should be kindly treated as withdrawn,” said the statement.
The merger was stymied by the insurance regulator who felt that the three-stage merger structure which involved a life insurance company merging with a finance company, albeit momentarily until the demerger of non-insurance activities, could not be permitted.
Last month, Max India had informed the exchange that HDFC Life and Max Life remain committed to the merger and are evaluating various options.
Since then HDFC Life had made clear its intentions to file for an initial public offering (IPO) and revisit the merger proposal subsequently. Last week the HDFC cleared a 9.75 per cent stake sale in HDFC Life through an initial public offering. The company’s foreign partner Standard Life, which holds 35%, was also expected to sell a significant stake through the IPO.
HDFC Life is the third-largest private life insurer in India with assets under management of Rs 91,742 crore as on March 31st 2017. The company reported a profit of Rs 892 crore in FY17 and has a net worth of Rs 3,829 crore. Analysts expect that the market valuation of the life insurer to be close to Rs 60,000 crore.