New Delhi: Max India has withdrawn the proposed merger agreement between Max Life and Max Financial Services with HDFC Standard Life Insurance.
"The confidentiality, exclusivity and standstill agreement dated June 17, 2016, entered among the parties is not being extended further. The proposed scheme and the applications filed in this regard with stock exchanges should be kindly treated as withdrawn," Max India said in a BSE filing on Monday.
Earlier this month, HDFC Standard Life Insurance had decided to come out with an IPO, but put on hold its proposed merger with Max Life in absence of regulatory approval.
Last month, Max India was confident of the proposed merger, saying both the parties were committed and "evaluating various options" post Irdai's denial last November to the scheme because of the complex nature of merging an insurance business with a financial entity.
At present, it said, no structure prior to an IPO of HDFC Life has been identified that satisfies shareholders' requirement.
As per the original plan, Max India was supposed to amalgamate Max Life Insurance with Max Financial Services. Subsequently, the insurance business of the merged entity was to be demerged so that it could be transferred to HDFC Standard Life Insurance Company.
However, the whole scheme did not go down well with the Insurance Regulatory and Development Authority of India (Irdai) as it was in contravention of the Section 35 of the Insurance Act, 1938, that does not allow merger of an insurance business with a non-insurance firm.
The Section 35 of the Insurance Act, 1938, does not allow merger of an insurance firm with a non-life insurance one.
HDFC Standard Life Insurance (HDFC Life) is a joint venture in the ratio of 61.5:35 between India's biggest mortgage lender HDFC Ltd and UK's Standard Life.
Max Financial Services, promoted by the USD 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....