HDFC Standard Life Insurance Co. Ltd. will launch an initial public offering, even as the fate of its proposed merger with Max Life Insurance hangs in balance after the deal ran into regulatory hurdles.
The IPO will be in the form of an offer for sale of up to 20 percent of the company’s paid up and issued equity capital by promoters HDFC Ltd. and Standard Life Plc, the insurer said in a regulatory filing on stock exchanges.
The board of HDFC Standard Life on Monday agreed to proceed with an IPO ahead of the merger, as both companies failed to arrive at a structure that would satisfy the regulator, said Gerry Grimstone, chairman of Standard Life Plc, which is a joint venture partner of HDFC Ltd. in the life insurer. The timeline of filing for the public offer, and the initial size of the offer will be decided in the next few weeks, he added.
It is now up to the shareholders of Max Life to decide on the future course of the deal, Grimstone said.
A listing by HDFC Life could delay the potential merger deal till 2018-end, which means that the Analjit-Singh promoted Max Group may look at other insurers for a merger, a senior executive of HDFC Life had earlier told BloombergQuint requesting anonymity.
HDFC Life and Max Life have not yet identified a merger structure which satisfies shareholders' requirements, the filing said. “If Max Life and ourselves are able to obtain all the necessary regulatory approvals, HDFC life Board and its promoter would be willing to re-evaluate the option of a merger with Max Life in due course,” it added.
The three-way deal structure proposed earlier hit a bump after objections raised by the insurance regulator and adverse comments from the Solicitor General of India, forcing the two to call off the merger after engaging with regulators for over a year.
Grimstone, who is also on the board of HDFC, did not rule out the possibility of a merger with Max Life, saying that there is "huge value" in the deal and that at some point in the future he would like to see the two companies "put together".