HDFC Life says open to acquisition of small, big players

HDFC Standard Life Insurance today said it is open to any kind of acquisition, including of Max Life if the "structural issues" that hampered its earlier deal are resolved.
"That problem was more to do with the structural issue and obviously Max has to solve that. So if they can solve their problem, which is not easy, and they are ready for this (merger) sometime in future then we will look at it," HDFC Life MD & CEO Amitabh Chaudhry told reporters at a roadshow here for the insurer's upcoming IPO next week.
HDFC Standard Life Insurance's IPO will hit the capital market next week fetching promoters about Rs 8,700 crore.

The IPO that opens on November 7, has a price band of Rs 275-290 per equity share, in which promoters HDFC Ltd and Standard Life will dilute 9.52 per cent and 5.4 per cent respectively in their joint venture HDFC Life.
Currently, HDFC owns 61.21 per cent stake in the joint venture which will come down to 51.69 per cent, while Standard Life's 34.75 per cent shareholding will come down to 29.35 per cent post the IPO.
"We believe that this IPO does a number of things for us. One of which is obviously it gives us the currency to go and seek for acquisitions for the future, as there are as many as 24 players in the industry," Chaudhry said.

On the pricing band of the IPO, Chaudhry said it leaves an ample room at the hands of retail investors.

He said the brand value of HDFC has created a lot of demand among investors for HDFC Life's IPO.
On mergers, Chaudhry said that the company is open to any kind of transaction that comes along its way including the Max Life if the structural issues are resolved.
"There are a number of small players out there whose size of the business is very-very small and sub-optimal. A number of these companies are also promoted by some of the banks and these banks need capital so it do believe ... if the right kind of business comes along then we will definitely look at it," he said.

He said the company will look at any acquisition that makes sense be it a small player or big.
"We will look at any transaction that comes along. We are not saying that we will look to gobble up only small players. The thing is that for small players the chances to be taken up is higher. There could be some large players also which could come to the table," he said further.
Last year in August, HDFC Life, Max Life Insurance Company (Max Life), Max Financial Services and Max India had entered into amalgamation agreements as part of which the life insurance business of Max Financial Services (held in Max Life) was to merge with HDFC Life.

However, the business proposition hit a road block with the Irdai disapproving to the proposal as it involved merging a life insurance business with a financial entity.