HDFC Bank’s life insurance arm is reportedly delaying its merger plans with Max Life. According to the latest accessed reports, Insurance Regulatory and Development Authority (IRDA) has rejected the current merger plans presented by the companies and both of them have not reached any conclusion on the alternative form of transaction. Accordingly, there is news that HDFC might even call off the proposed transaction and focus on raising money by an IPO.
The stakeholders in HDFC Life are looking to focus on a public listing and planning to do that as soon as possible. The proposed merger will delay the IPO by at least a year.
The proposed merger plan included a merger of HDFC Life, Max Financial Services Ltd and Max Life Insurance. According to the sources close to the development, the companies could not reach to an alternative merger plan after the initial plan was rejected by IRDA in May. According to the statement of IRDA, an insurance company can not merge with a non-insurance company according to section 35 of IRDA Act.
The sources also claimed that Max Life was looking to work on an alternate solution, however, the process would have taken time. The stakeholders of HDFC life were however, pushing for an immediate outcome, be it a merger or the IPO.