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BW Businessworld

Max Merger With HDFC Life Called Off

The exclusivity agreement with HDFC Life, valid till 31 July 2017, will not be renewed, informed the companies in an official statement

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Max Financial Services (MFS), Max India and Max Life on Monday (31 July) has confirmed that the proposed merger with HDFC Life has been called off. The exclusivity agreement with HDFC Life, valid till 31 July 2017, will not be renewed, informed the companies in an official statement.

The prospective partners had evaluated several alternate structures over the last month. However, the inordinate time associated with finalisation and approval of these structures led to this decision.

Max Financial Services was created in 2016, as a result of a demerger of the erstwhile Max India, to provide investors specific and undiluted access to the Group’s life insurance business, provide sharper focus to Max Life and unlock shareholder value.

This demerger resulted in significant value creation based on the strong intrinsic value and performance of Max Life.

The quality of the Max Life business, its performance in the market, and the position of MFS as a listed entity with sole focus on the life insurance business, made Max Life and MFS attractive potential merger partners for HDFC Life. Max was therefore approached with this merger proposition.

Max Life has reported consolidated revenues of Rs 12,971 crore in fiscal year 2017. Its embedded value (EV) stands at Rs 6,590 crore, with 20 per cent operating return on EV. Its assets under management (as at 31 March 2017) are Rs 44,370 crore, a 24 per cent growth over last financial year.