New Delhi: HDFC Ltd and Max Financial today clarified that they have not received any communication either from the government or regulator for the proposed amalgamation of HDFC Life and Max group entities.
"With reference to scheme of amalgamation involving HDFC Life, Max Financial Services, Max Life Insurance and Max India, the Corporation (HDFC) has not received any independent confirmation in this regard from any regulator/government authority," HDFC said in a regulatory filing.
Housing Development Finance Corp's (HDFC) filing was in response to a clarification sought by exchanges on media reports about developments on amalgamation process involving its subsidiary HDFC Life.
In a separate communication to exchanges, Max Financial responded in a similar manner saying it has "not received any formal confirmation in this regard from any regulator/government authority."
The proposed merger is facing regulatory hurdles due to the complex nature of the scheme involving merger of a non- insurance entity with an insurer. In the proposed tier-structured demerger and merger plan, Max India will amalgamate Max Life Insurance with Max Financial Services.
Subsequently, the insurance business of the merged entity is to be demerged so that it can be transferred to HDFC Standard Life Insurance Company. As per the proposed scheme, the remaining of the merged entity that is, minus the insurance business, will be amalgamated with Max India. Max Financial Services, promoted by USD 2 billion Max
Group, is the holding company for Max Life.
The deal structure was designed in this manner so that HDFC Life would automatically get listed on the stock exchanges since Max Financial Services is already listed. In December, HDFC Vice-Chairman and Chief Executive Keki Mistry had said that upon merger, the company will keep the non-insurance business of Max Financial Services out of the insurance venture.
"It is in fact a structural change rather than an actual merger," Mistry had said. Stock of HDFC closed 0.94 per cent up at Rs 1,524.90 while Max Financial ended 8.52 per cent down at Rs 568.40 apiece on BSE today. Some media reports today attributed the sharp decline in shares of Max Financial to Max Life merger delay.
