Standard Life eyes HDFC Life IPO as Max Life merger stumbles

The country’s regulator, Insurance Regulatory and Development Authority of India (Irdai), had expressed concerns about HDFC Life’s potential merger with and Max Life Insurance Co. since last year and has now rejected what would have been the country’s largest life insurance merger deal between.

IRDA said it has denied permission to the proposed merger as the structure of the deal violates Section 35 of India’s Insurance Act, 1938, which bars the merger of an insurance company with a non-insurance firm.

Despite the decision, the Indian insurers said they remain committed to doing a deal and are evaluating various options.

However, in a later statement, Standard Life said there’s no certainty that any such options are viable.

“In which case, Standard Life intends to propose an IPO of HDFC Life at the earliest possible opportunity, subject to appropriate market conditions,” the company said.

Senior HDFC officials have said that while both companies would continue to work towards a merger, an initial public offer (IPO) was likely to take place earlier now.

“We will work on the IPO as well as the merger simultaneously. If there is an alternative structure, which can get Irdai’s approval in the next three months, we would look at it. Realistically speaking, the IPO is going to be a significantly easier process and is more likely to happen,” said the official.