HDFC LIFE TO GO AHEAD WITH IPO BEFORE MERGER WITH MAX LIFE
HDFC Standard Life Insurance Co Ltd’s board approved a proposal to sell as much as 20% of the insurer through an initial public offering (IPO) even as it reiterated its commitment to a potential merger with Max Life Insurance Ltd at a later date.
“We will file an application with Irdai (Insurance Regulatory and Development Authority of India) tomorrow for an IPO and we expect an approval within 30-45 days,” said Amitabh Chaudhary, MD and CEO of HDFC Standard Life, in an interview after the company’s annual general meeting late on Monday evening.
HDFC Standard Life is a joint venture between Housing Development Finance Corp. Ltd and Standard Life Plc.
“We have kept the option for the proposed merger with Max Life open,” said Chaudhary. “We still feel there is a lot of synergy in the merger and will benefit both the companies. The IPO should happen before December.”
So, the merger may potentially happen after the IPO if the new merger structure is approved by the regulators, said an HDFC Standard Life official who spoke on condition of anonymity.
HDFC Standard Life had started preparing for an IPO last year but later put it on hold as merger talks gained momentum. It is expected to hire investment banks in the next few days to manage the initial share sale.
The insurance regulator had declined to approve the structure—which envisaged Max Life Insurance merging with Max Financial Services in the first step—citing a breach of norms under section 35 of the Insurance Act, which bars the merger of an insurer with a company that is not in the insurance business.
The two firms had, however, mutually extended the merger deadline from June 30 to explore alternative merger structures and were considering the merger of Max Life and HDFC Life to create a new company, to be tentatively called HDFC Plus. The new company will then incorporate a new subsidiary to which it will transfer the insurance business.