Exclusive: Standard Life’s Gerry Grimstone On The Merger Failure And IPO Ahead

HDFC Standard Life Insurance Co. Ltd. will opt for an initial public offering ahead of the potential merger with Max Life, Gerry Grimstone, chairman of Standard Life Plc told BloombergQuint in an exclusive interview.

HDFC Life will now rework the terms of its merger with Max Group-owned peer after the deal ran into a regulatory hurdle, he said.

Standard Life Plc, a global investment company, is the joint venture partner of HDFC in HDFC Standard Life. 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.

Here are the highlights of the conversation with Gerry Grimstone.

‘IPO Before Merger’

• The board of HDFC Standard Life opted for an IPO ahead of merger.
• Both shareholders – HDFC and Standard Life Plc – will tie up the loose ends on the IPO in the next couple of weeks.
• HDFC and Standard Life to decide on the size of dilution for the IPO in due course. Together, the two companies will have to look at diluting 20 percent stake, with employees holding 5 percent in the company.
• The timeline, initial size of the offer, are matters that needs to closed in the next few weeks. We still needs some technicalities to be sorted, the board still needs some final decisions to make.
• The merger structure after an IPO will make it easier to get approval from the regulator

Also Read: HDFC Life Board Decides To Launch An Initial Public Offering

‘Merger Still Makes Sense’

• Both HDFC Life and Max Life have failed to arrive at a merger structure that would satisfy the regulator.
• The merger with Max Life continues to make sense. Up to the shareholders of Max Life to decide on the future course of action.
• My sense is Max Life sees huge value in the merger. At some point in the future we will see the two companies put together. I can’t give any undertakings on that as all sorts of approvals will need to be obtained.

Standard Life-Aberdeen Merger

• The merger is subject to regulatory approval. My hope is it should be completed on August 14.
• Together with Aberdeen, we are a very powerful force in India.
• Through our investments in HDFC we will be a large investor in life insurance and a large investor in the largest onshore asset company in India.
• Aberdeen itself manages $12 billion in equity and debt.