HDFC Life and Max Life are currently contemplating on creating India’s largest private life insurer as cut-throat competition and regulatory hurdles have provoked them to discover new ways of growing their market share and profitability.
Currently, discussion is at a naïve stage between the two firms being led by Deepak Parekh, Chairman of Housing Development Finance Corp, HDFC Life’s parent and Analjit Singh, Founder of Max Group that owns majority stake at Max Life. The official announcement is eagerly awaited. Apparently, if all goes well, the merger would be the first to create a market value of approximately Rs. 50,000 crore (racing ahead of ICICI Prudential). However, it still remains a distant second to the state-run LIC that boasts of capturing up to 70% market share.
Since the shareholding structures of both firms are unique, one awaits to see what the final holding pattern would appear. The companies have appointed their legal and due diligence advisors. Overcoming all obstacles that come their way would be tricky. The shareholders are optimistic about the collaboration and have agreed to work towards a single merged company. The post-merger structure still lacks clarity whether it is for the shareholders or policyholders. It is said to be a dual association where HDFC Life would merge with Max Life and the entire merged entity would amalgamate with Max Financial Services. This would make better business sense as the firms would enhance their ability to offer innovative and refined life insurance products to their customers.