Max India today called off the proposed merger between Max Life and Max Financial Services with HDFC Standard Life Insurance, citing inordinate delays.
"Max Financial Services (MFS), Max India and Max Life today confirmed that the proposed merger with HDFC Life has been called off. The exclusivity agreement with HDFC Life, valid till July 31, 2017, will not be renewed," Max India said in a BSE filing.
It further said: "The prospective partners had evaluated several alternative structures over the last month. However, the inordinate time associated with finalisation and approval of these structures led to this decision."
Max India said the company will continue to aggressively invest in organic and inorganic growth levers.
"This will be done through investments in enhancing own channels such as agency and digital, delivering superior policyholder experience, deepening and leveraging existing bancassurance partnerships, and forging new distribution alliances. In addition, it will pursue acquisition opportunities as the industry further consolidates," it added.
Earlier this month, HDFC Standard Life Insurance had decided to come out with an IPO, but put on hold its proposed merger with Max Life in absence of regulatory approval.
Last month, Max India was confident of the proposed merger, saying both the parties were committed and "evaluating various options" post Irdai's denial last November to the scheme because of the complex nature of merging an insurance business with a financial entity.
At present, it said, no structure prior to an IPO of HDFC Life has been identified that satisfies shareholders' requirements.
As per the original plan, Max India was supposed to amalgamate Max Life Insurance with Max Financial Services.
Subsequently, the insurance business of the merged entity was to be demerged so that it could be transferred to HDFC Standard Life Insurance Company.
However, the whole scheme did not go down well with the Insurance Regulatory and Development Authority of India (Irdai) as it was in contravention of the Section 35 of the Insurance Act, 1938, that does not allow merger of an insurance business with a non-insurance firm.
HDFC Standard Life Insurance (HDFC Life) is a joint venture in the ratio of 61.5:35 between India's biggest mortgage lender HDFC Ltd and UK's Standard Life.
Max Financial Services, promoted by the USD 2 billion Max Group, is the holding company for Max Life, which is a joint venture with Mitsui Sumitomo Insurance Company. Max Financial owns 68 per cent stake in Max Life and Mitsui Sumitomo 26 per cent.