India: HDFC Standard Life, Max Financial to initiate talks on merger

Visual from Max website

Max Financial Services Ltd said on Friday that it was initiating talks for a possible merger of Max Life Insurance Co Ltd and Max Financial Services Ltd with HDFC Standard Life Insurance.

“Max Financial Services Limited has informed the Exchange that the Board of Directors of Max Financial Services Limited at its Board meeting held on June 17, 2016, approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination through a merger of Max Life Insurance Company Limited and Max Financial Services Limited into HDFC Standard Life Insurance Company Limited by way of a scheme of arrangement,” the company said in a notice to the stock exchanges.

“The agreement provides for a mutually agreed exclusivity period for due diligence and discussions between the parties in relation to the proposed transaction,” it added.

HDFC, in a separate statement to the exchanges, confirmed that it was entering exclusive talks for a possible merger.

No details were provided on the time frame over which the final contours of a deal would be announced. The HDFC board is also scheduled to meet in Mumbai to discuss the issue, said a person familiar with the plan.

The confirmation of merger talks comes hours after it was reported that HDFC Standard Life and Max Financial are discussing the option of a merger. On Friday morning, The Economic Times first reported that the merger talks are being led by Deepak Parekh, chairman of Housing Development Finance Corporation Ltd (HDFC), and Analjit Singh, founder of the Max Group.

The deal, if concluded, will create the largest private insurance company in the country. It will overtake ICICI Prudential, which is currently the largest private insurer.

HDFC Life has been preparing to go public. In April, the board of HDFC approved a proposal to sell shares in HDFC Life through an initial public offering. “The plan is to do this divestment in the second part of the calendar year,” Keki Mistry, vice-chairman and chief executive officer of HDFC, told Mint after the board decision on 20 April.

HDFC intends to sell up to 10% stake in HDFC Life through the IPO.

At 12.02pm, Max Financial Services Ltd shares were trading at Rs 483.75 on the BSE, up 13% from previous close, while India’s benchmark Sensex Index rose 0.45% to 26644.99 points. HDFC shares rose 1.6% to Rs 1,219.95.

Also Read:

India: HDFC board approves IPO plan for insurance unit

Axis Bank hikes stake in Max Life Insurance to 5.99% for $14m

This article was first published in Livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.