Explaining the proposed deal to the media in Mumbai, Analjit Singh, Founder of the Max Group, said: “First Max Life Insurance will merge with Max Financial Services – a listed entity”.
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HDFC Standard Life Insurance Co Ltd on Friday (17 June) said it has agreed with Max Financial Services and subsidiary Max Life Insurance Co Ltd to open exclusive merger talks, as the trio target an increased share of India’s insurance market. Its total assets under management (AUM) stood at Rs 74,247 crore as of March 31, 2016.
Max Life is a joint venture between Max Financial and Japan’s Mitsui Sumitomo Insurance Co. “Axis Bank is the bancassurance partner for Max Life Insurance, like HDFC Bank for HDFC Standard Life”, a senior official of a private life insurer told IANS, preferring anonymity.
HDFC previous year sold a 0.95 percent stake in the insurance unit to PremjiInvest, a fund set up by Indian outsourcing billionaire Azim Premji, in a deal that valued the insurer at about 209.5 billion rupees ($3.1 billion), data compiled by Bloomberg show. For the year ended March 31, 2015, HDFC Life’s total premium income stood at Rs 16,313 crore, and it reported a profit of Rs 820 crore.
The proposed arrangements would be subject to due diligence, definitive documentation and applicable board, shareholder, regulatory, respective High Courts/NCLT, and other third party approvals, as may be applicable, it added.
HDFC recently hired investment bankers for the planned initial public offering of HDFC Life Insurance, which could raise $500 million (over Rs 3,000 crore).
As part of the deal, Max Life will be merged into parent Max Financial Services, which in turn will merge with HDFC Life, making it a publicly traded company. Max Life Insurance had total AUM of Rs 35,824 crore end of last fiscal.
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There are 24 life insurance companies in the country, including state-owned LIC with a market share of over 70 per cent.
