After IPO is over, if Max is willing, we can start talks again: Amitabh Chaudhry, HDFC Life

Talking to ET Now, Amitabh Chaudhry, MD & CEO, HDFC Life, says from the IPO perspective tomorrow onwards all the merger discussions have to come to a stop and that is exactly what we intent to do.

Edited excerpts:


The HDFC-Max Life merger has finally been called off. What exactly has been the rationale for calling off this merger though most on the street did expect this to happen given the exclusivity date was gone by?

Well the merger still has not been called off yet officially because today is the last date, our stencil agreement exists till today. We have not officially called if off but as our Chairman who was quoted in one of the media papers the merger seems to be off the table because we still do not have a structure which has passed by the regulatory authorities. It it is important at least for our shareholders to get an IPO done and we are moving forward with that process.

We have obviously been very impressed and we really like the management team and the kind of business they run and the franchise they have, but we could not come over the structure which could ensure that all the stakeholders in the merged entity were satisfied and as a result we have to push over the IPO. We are still hoping at some stage in the future we can come together, the genesis and the rationale for the merger has not gone away.

Your Chairman was on our channel this morning only and they did talk about the progress of the IPO. It is actually a step in the right direction when the earlier proposed format of merger with Max has not been worked but can you confirm for us now that it was a structure which was the issues and had nothing to do with valuations?

No, it was always the structure which was the issue. The level of trust between the promoters involved had only increased over a period of time since we announced the merger in August last year. From our perspective we understand each other much better. Our understanding of the business is better, our appreciation of each other’s business is better. It has only to do with the structure and please understand all the milestones where we ran into problems were only because of the structural issues rather than anything else.

In November, we got a letter from Solicitor General saying that under Section 35, the current structure will not work. We went and appealed to the Attorney General. We did not get an opinion and we have tried a lot of other structures but invariably they keep running into some hurdle either tax or regulatory issue or whatever that might be. We really need to sit back and see what is the best structure so that will take time.

Can you also talk to us as you just hinted moments back that at this particular talk may have stalled today this is the last day and do you think there is a possibility that at a future date you can again come back to the table and come up with the fresh structure? By that time you may have done your homework regarding how you can take care of the regulatory issues and the other hurdles?

When we go for an IPO, it has to be very clear that we are not having any merger discussion whatsoever. So from that perspective, from tomorrow onwards all the merger discussions have to come to a stop and that is exactly what we intent to do. Once we are done with our IPO, if Max Group is willing we obviously will be very happy to in reengage them in a conversation and move towards a merger but obviously both the parties have to be willing to do that and that is what we are hoping but only time will tell.

Some of the street analyst were talking about this possibility as well that HDFC Life would now go for a fresh IPO plan, a completely clean independent plan and once they are a listed company, then the possibility of a merger with another entity will arise and of course in this case Max would come back on stream. This is also a kind of a plan B which you are probably working with?

Yes, as I said, we cannot have a situation where while we are doing an IPO, we have merger discussions going on because we have to be clear to the market. In the future if this opportunity still there and if Max Group is willing to engage in a conversation, we will be very happy to engage with them in that conversation but that applies to lot of other opportunities that might also come up. So yes, we really liked what we saw and we really appreciate and regard what they have created and hopefully we can come together some time in the future but not at this point of time.

But at a later stage you just said that Max will not be the only suitor you may look at. You may be open to looking at or initiating talks with other entities. Which are these companies which you like?

Well in insurance business, lot of parties have been coming to the table on a pretty frequent basis and no transaction has happened and we have always gone and told the market that we are willing to look at any opportunity that comes to our table if it make sense for us. In that context, for us, Max represents the best opportunity out there and if they are willing to have a conversation after the IPO, we will be very happy and delighted to have that conversation.