The board of HDFC Life on Monday approved plans to come up with an initial public offer (IPO). The private life insurer also put on hold its proposed merger with Max Life in the absence of regulatory approval. The board of HDFC Standard Life Insurance in its meeting held on Monday approved an enabling resolution for an initial public offer (IPO) by way of offer for sale by the HDFC and Standard Life in the ratio as mutually agreed amongst them up to a maximum of 20 per cent of the paid up capital, the insurer said in filing with stock exchanges. “With reference to our earlier announcement of a proposed merger between HDFC Life and Max Life, we continue to believe that such a transaction if it can obtain the necessary approvals would create strategic value for both the companies. At the present time, no structure prior to an IPO of HDFC Life has been identified which satisfies shareholders requirements…” it added.
If Max Life and HDFC Life are able to obtain all the necessary regulatory approvals, HDFC Life board and its promoters would be willing to revaluate the option of a merger with Max Life in due course.”
Standard Life, 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 per cent by buying an additional 9 per cent for Rs 1,706 crore. Now, a meeting of the board of directors of HDFC is scheduled to be held on July 26. In June 2016, Max Financial Services and HDFC had said they had received board approvals for the merger of their life insurance businesses, Max Life and HDFC Life, respectively.
The merger of HDFC Life and Max Life, which was announced in August 2016 was rejected by Insurance Regulatory and Development Authority of India (Irdai) which objected to the merger structure in its current form.