HDFC Life May Opt To List Before Merger With Analjit Singh’s Max Life
HDFC Life board will meet on July 17 to decide on key issue of IPO or merger.
HDFC Life Insurance Ltd. may look at an initial public offering before its proposed merger with Max Group-owned peer after the deal hit a regulatory hurdle, a senior executive at the insurer said requesting anonymity.
The HDFC Life board will meet on July 17 to consider, among other things, whether the company should go public ahead of the merger, the executive said. A listing will delay the deal till 2018-end, the person said.
The only concern is that if the subsidiary of mortgage lender HDFC Ltd. decides to list first, Analjit Singh-promoted Max Group may not be willing to wait. It could look at other insurers for a merger, the executive said.
HDFC Life had hired merchant bankers for its IPO in 2016 when the opportunity to merge with Max Life came through. The board decided to go ahead as it would have ensured eventual listing of the insurer since the deal involved a listed entity of the Max group. Objection from insurance regulator and adverse comments from the Solicitor General of India forced the two to call off the merger after engaging with regulators for over a year.
HDFC Life didn’t respond to emailed queries by BloombergQuint. A Max Group spokesperson refused to comment citing the confidentiality agreement.
A listing could be completed by year end while a merger may take another 12-18 months, said the person cited above. HDFC Life’s rival ICICI Prudential Life Insurance has listed and SBI Life Insurance is in the process of filing for its IPO. In the next six months, there will be others and if HDFC Life doesn’t go for it now, the offering would get delayed to 2019, the executive said.
HDFC Ltd. had informed stock exchanges on June 7 about the regulatory approvals not coming through for the current three-way deal structure and that both the parties are evaluating other options. The regulator didn't allow the merger of a life insurance company with a non-life insurer. Max Life would have been housed within the non-life company.
HDFC Life’s partner Standard Life Plc is in favour of an IPO. The British company last year increased its stake in the Indian insurer to 35 percent by buying an additional 9 percent for Rs 1,706 crore.
There can be no certainty that any such options (a merger resulting in listing of HDFC Life) will be viable in which case Standard Life intends to propose an IPO of HDFC Life at the earliest possible opportunity, subject to appropriate market conditions.Standard Life Plc’s June 8 Statement To London Stock Exchange
The U.K.-based company is in the midst of a merger with Aberdeen Asset Management Company and its board will have a limited bandwidth to actively participate in the IPO process, the HDFC Life executive quoted above said.