Merger with Max Life will automatically list HDFC Life on Indian bourses

As reported, Max Life Insurance and Max Financial Services will now be a part of HDFC Life, thanks to a two-stage merger. As per sources, this merger will facilitate automatic listing of HDFC Life on the Indian bourses with a market capitalisation of about Rs 45,000 crore to Rs 50,000 crore, thus making it the largest pureplay listed life insurance player of the country.

In the final entity after the merger, HDFC group, including HDFC, Standard Life and Azim Premji, will have about 60-65% stake, while the Max group, under Analjit Singh’s leadership, will have 35-40% ownership, to be distributed among Singh family, Japanese financial behemoth Mitsui Sumitomo Insurance (MSI), a member of MS&AD Insurance Group, Goldman Sachs, KKR and general public.

After the report of this merger, shares in Max Financial Service touched the upper circuit of Rs 514 and closed at Rs 473.

As of now, Max Financial Services, a pureplay holding company for Max Life Insurance, finds place on on the Indian bourses, for which Analjit Singh had completed a three-way split of Max India last financial year. After demerger, Singh had sold 9.5% in Max Financial Service to KKR, the US-based private equity firm, in a deal of about Rs 1,000 crore worth.

The deal announced today would have Max Life Insurance (MLI) merging with its parent company Max Financial Services (MFSL), which currently owns 68.01% stake, while the Japanese partner MSI owns 25% and Axix Bank holds another 5.99%; the remaining 1% stake while key employees of MSI.

After this, the final merged entity will be combined with HDFC Life Insurance. "Given the current discussion, in the merged entity HDFC Life - MAX Life, the HDFC group will have about 65% stake and Max Group will have about 35% stake," a person involved in the deal told ET.

After this merger, HDFC Life Insurance will automatically get listed at about Rs 50,000 crore, helping HDFC raise funds by diluting its stake in the insurance firm though stock exchanges. This would also allow some of the marquee investors, who had invested in MFSL a few years back, to exit as and when they want.