Max India called off the proposed merger between Max Life and Max Financial Services with HDFC Standard Life Insurance because of “inordinate delays”.
“Max Financial Services, Max India and Max Life today confirmed that the proposed merger with HDFC Life has been called off. The exclusivity agreement with HDFC Life, valid till July 31, 2017, will not be renewed,” Max India said in statement.
“The prospective partners had evaluated several alternative structures over the last month. However, the inordinate time associated with the finalisation and approval of these structures led to this decision,” it said while commenting on the reason for terminating the merger.
The announcement comes days after HDFC Standard Life Insurance Company (HDFC Life) decided to put on hold the proposed merger with Max Life. It had also announced that it would go ahead with an initial public offering.
In August last year, the boards of HDFC Life, Max Life and two other firms of the Max group had finalised the merger of the two insurers.
The process would have seen Max Life first merging with Max Financial Services (MFS) – the holding company. Thereafter, the life insurance business was to be demerged from Max Financial Services into HDFC Life, which would have been the merged insurance entity.
The proposal was, however, rejected by sector regulator IRDA as it involved the merger of an insurance company with a non-insurance entity. Such a merger was in contravention of section 35 of the Insurance Act, 1938.
Max India said the company would continue to invest in organic and inorganic growth.
This, it said, will be done through “investments in enhancing its own channels, delivering superior policyholder experience, deepening and leveraging existing bancassurance partnerships, and forging new distribution alliances”.
HDFC Life is a joint venture between India’s biggest mortgage lender HDFC Ltd and the UK’s Standard Life.
Max Financial Services, promoted by the $2-billion Max group, is the holding company for Max Life, which is a joint venture with Mitsui Sumitomo Insurance Company. Max Financial owns 68 per cent stake in Max Life and Mitsui Sumitomo 26 per cent.
It reported a consolidated revenue of Rs 12,971 crore and shareholder profit before tax of Rs 768 crore during the last financial year.
Max India calls off merger with HDFC Life
